Annual Report 14-15 FINAL WEB

annual report
201415
1
Audit Office of New South Wales | Annual Report 201415
annual report 201415

This annual report summarises
the activities and performance of the
Audit Office of New South Wales for
201415 against the main goals,
strategies and targets in its strategic
plan. As well as reporting on the financial
results for the past year, the report looks
to the year ahead. This and earlier annual
reports are available on our website.
audit.nsw.gov.au
Contents

Our
organisation

Highlights

Parliament
11

Agencies
19

People
35

Profession
43

Governance
47

Finances
59

Financial
63
report

Appendices
89

Index
115

Glossary
116
The history of the Auditor-General

Making a difference through audit excellence.
1824 William Lithgow appointed Colonial Auditor-General,

to compile and examine the colonys accounts and
report on government departments to the Governor.
Level 15, 1 Margaret Street

Sydney NSW 2000 Australia
1855 The UK Constitution Act 1855 formalised government
t +61 2 9275 7100
in New South Wales, and the Auditor-General was

made a member of the government.
f +61 2 9275 7200

e mail@audit.nsw.gov.au
1870 Powers and duties of the Auditor-General first set

in legislation, in the Audit Act 1870.
office hours 8.30 am5.00 pm
1902 Audit Act 1902 prohibited the Auditor-General from

GPO Box 12
Sydney NSW 2001
Members of Legislative
Assembly
Parliament House
Sydney NSW 2000
Under section 12A of the Annual Reports (Statutory

Bodies) Act 1984, I have pleasure in submitting for
information of members, the reports of the activities
of the Audit Office of New South Wales for the year
ended 30 June 2015.
being a member of the Executive Council or of the

parliament.
1929 Audit (Amendment) Act 1929 changed the tenure

of office of the Auditor-General from life to ceasing
at 65.
1984 Public Finance and Audit Act 1983 established the

Auditor-Generals Office (6 January 1984).
1989 Auditor-Generals Office declared a statutory body,

allowing it to be both more independent and more
commercial.
1991 The Public Finance and Audit Act 1983 expanded the
Auditor-Generals role to include performance audits,
limited tenure to seven years and prevented
acceptance of any other post in the NSW public
service.
2001 Auditor-Generals role expanded to reporting on issues

A T Whitfield PSM
Acting Auditor-General
4 September 2015
of waste, probity and financial judgement.
2004 Auditor-General given power to employ staff directly,

and set wages and conditions.
2013 Tenure of Auditor-General extended to eight years.
Cover: Liz Ames Senior Auditor

Client location Fire and Rescue New South Wales
2
Our organisation
Built on strategic foundations
Our vision
Who we are
Making a difference through audit excellence.
The Audit Office of New South Wales

is a statutory authority, established under
the Public Finance and Audit Act 1983,
that conducts audits for the Auditor-General.
Our mission
To help parliament hold government accountable for its use of public resources.
Our values
Purpose we have an impact, are accountable, and work as a team.
People we trust and respect others and have a balanced approach to work.
Professionalism we are recognised for our independence and integrity
and the value we deliver.
Our main clients

}}
Parliament
}}
NSW
}}
The
of New South Wales
What we do
The Auditor-General is responsible for audits
and related services.
The Audit Office conducts financial and
performance audits, principally under the
Public Finance and Audit Act 1983 and the
Corporations Act 2001.
Financial audits provide an independent opinion
on NSW Government agencies financial
statements. They identify whether agencies
comply with accounting standards and relevant
laws, regulations and government directions.
Government agencies
people of New South Wales.
Audit Office
of New South
Wales*
The Auditor-General helps parliament hold

government accountable for its use of public
resources.
Report
Parliament
Performance audits build on our financial

audits by reviewing whether taxpayers' money
is spent efficiently, effectively, economically
and in accordance with the law.
Special reports seek to confirm that specific
legislation, directions and regulations have been
adhered to by government agencies.
Accountability
Audit and Review
Agencies
NSW Treasury
Transport
Attorney General and Justice
Premier and Cabinet
Health
Trade and Investment,
Regional Infrastructure and Services
Finance and Services
Education and Communities
The Auditor-General also provides certain

assurance services for Commonwealth
grants and payments to the State under
Commonwealth legislation.
Our resources
249 full-time equivalent staff at the Audit Office
at 30 June 2015.
$36 million revenue from government agencies
and universities for audits of their financial
statements.
$7 million from the government for our
performance and compliance audits and reports
to parliament.
10 external contract audit agents assist with our
financial statement audits, representing about
12percent of our financial audit work.
Family and Community Services

Government Universities in New South Wales
* The Audit Office of New South Wales sits independently from government,
alongside other watchdog agencies.
3
201415 highlights
Parliament
Agencies
People
94% of parliamentarians
satisfied with the Audit
Offices reports and services
96% of financial audit and

86% of performance audit
recommendations accepted
24% staff turnover, up from

12%last year
100 per cent agreed we provide valuable

information on public sector performance.
Performance index for CFO satisfaction

remains high at 74.
100 per cent agreed we perform audits with

integrity.
Performance auditees overall performance

index satisfaction decreased to 70
from 74.
97 per cent believed our financial audit

reports assist in monitoring the financial
performance of the NSW public sector.
93 per cent believed our performance audit
reports are easy to understand.
100 per cent of 30 June financial audits
reported to parliament on time.
436 financial audits completed.

2 new modified audit opinions issued and
6cleared.
83 per cent of financial audit opinions issued
within ten weeks.
72 per cent of staff describe the Audit Office

as a great place to work, down from 82 per
cent.
68 per cent of staff were moderately
to highly engaged, down from 74 per cent.
52 per cent of staff report reasonable to very
high morale, down from 64 per cent.
54 per cent of middle management are
women, broadly similar to last year.
67 per cent staff productivity, up from 62
percent.
11 performance audits completed.

100 per cent of 31 December financial audits
reported to parliament on time.
67 per cent staff satisfaction, a drop from 73

per cent last year.
}}
Refer to page 19
4.5-star greenhouse building rating

maintained.
10 performance audits followed up by

parliament's Public Accounts Committee.
}}
Refer to page 35
}}
Refer to page 11
Overall satisfaction %
Aggregate performance indices
Financial audit clients (CFO only)

Performance audit clients
Overall satisfaction
% satisfied or very satisfied
Survey not conducted in 2011 or 2015
2011
74
67
Staff satisfaction %
2012
94
97
98
90
94
74
67
90
2013
76
77
78
80
73
73
67
78
2014
75
74
2015
75
2014
75
2013
2016 TARGET
2012
70
2016 TARGET
2015
2011
2016 TARGET
2014
2013
2012
2010
2009
74
4
Profession
Finances
Benchmarks
30 presentations made,
two less than last year
$0.5 million loss (excluding

superannuation adjustments)
Hosted the Australasian Council of AuditorsGeneral (ACAG) Performance Audit Managers

Workshop 2015.
Current ratio (solvency) is healthy.
Our costs compare

favourably with other
Australian audit offices
5 submissions made on proposed changes

to accounting and auditing standards.
94 per cent of our creditors were paid

on time.
}}
Refer to page 59
}}
Refer to page 43
Presentations delivered
We benchmark ourselves against the national

average for audit offices.
Total audit costs (excluding payroll tax)

per $000 of public sector transactions $
Operating results/$m
Excluding superannuation
49
Audit Office of New South Wales

Average of all Australian audit offices
1.0
45
40
0.8
32
30
2011
.25
.37
31
2012
.27
2016 TARGET
2015
2014
2013
2011
2012
2016 TARGET
2015
2014
2013
2012
2011
.38
2013
.27
.37
2014
.26
.34
2015
.26
.35
-0.2
-0.3
-0.4
Governance
Our governance
framework reflects the
8 core principles
of the ASX Corporate
Governance Principles and
Recommendations
No internal suspected or actual frauds were
reported.
The Audit Office received three formal GIPA
access applications.
We received and examined eight public
interest disclosures.
-0.5
Total audit costs (excluding payroll tax)

per $000 of public sector assets $
Average of all Australian audit offices
2011
.13
.17
2012
.13
.16
2013
.13
.17
2014
.12
.15
2015
.12
.17
}}
Refer to page 47
5
Auditor-Generals message
I am pleased to present my first annual report as the Acting Auditor-General for New South Wales
I would like to acknowledge the work
and commitment of the previous AuditorGeneral, Grant Hehir. During his time,
he instilled a new vision and set new
objectives for the Audit Office of New
South Wales. We now have a greater
focus on the NSW Parliament and on
ensuring our audits are relevant through
a stronger understanding of the public
sector. We are also now more focused on
our own productivity and efficiency.
goals remain unchanged and cover our

products, operational excellence, people
and constructive leadership.
Producing better outcomes
A year of achievement
Ultimately, we are here to produce better

outcomes for the State and the people of
New South Wales. It is very pleasing that a
high percentage of our recommendations
are accepted, with 96 per cent of financial
audit recommendations and 86 per cent
of performance audit recommendations
accepted in 201415, demonstrating our
relevance and capacity to influence
(see page 22).
We have achieved a lot this year by

ensuring our audits are increasingly
focused on the issues that are important
to government. Understanding
government is at the heart of our goal to
provide value through our products and
interactions with our clients.
We are also continuing on our journey

to demonstrate that we are efficient and
productive something we expect of
all the NSW public sector agencies we
audit. With this in mind, we have released
our new contracting-out framework and
pricing approach.
Our strategic goals have delivered

improvements across the organisation.
Our audit methodology, new practice
management system and mobile
technologies are achieving greater
efficiencies and supporting our
increasingly mobile workforce. In terms of
leadership, the effort made in introducing
a more constructive style is improving how
we relate to each other and our clients.
The contracting-out framework

benchmarks us with external service
providers to ensure we remain cost
effective and gives us a chance to learn
and adopt better practices.
I am enjoying the opportunity to build on

this work.
We do face challenges, with staff turnover

for our audit professionals well above what
is sustainable in the medium to long-term
and our staff satisfaction and morale well
down on previous years. This is partly
due to staff unease and uncertainty with
our new people strategy (see page 49),
which also contributed to staff rejecting
a proposed enterprise agreement in May
2015. I believe these areas will improve
in the coming year as we proceed with
creating a constructive and achievement
oriented environment for our people. On
the positive side, many of the staff leaving
our organisation have moved into more
senior roles in the public sector, reflecting
how well we develop and grow our staff
(see page 38).
Reaffirmed our vision and

strategic direction
Making a difference through audit
excellence continues to be our vision
along with our mission to help parliament
hold government to account. Our strategic
Our pricing approach gives an undertaking

that the growth in our audit fee revenue
will be consistent with the governments
expenditure constraints placed on
agencies and establishes a clear
expectation that we manage the impact
we have on our clients finances. Like our
clients, we must live within our means.
A more productive multi-year

performance audit program
During the latter part of 2014, our
Performance Audit team went through a
restructure to achieve greater productivity
(see page 42). We removed a layer of
management and increased the number
of auditors in the field. The new structure
is now working well and we expect to
publish a record number of performance
audits in the coming year with no real
increase in total cost.
In April 2015, we released our
performance audit program for the coming
three years (see page 17). The program is
regularly reviewed and updated to reflect
significant emerging issues and changes
to government priorities. Particular
attention is given to ensuring the program
reviews how well the NSW Government
is implementing its policy objectives and

reform agenda as well as adequately
covering the nine clusters that made up
the government in 201415.
Staff enterprise agreement

rejected
During the year, we embarked on a
new people strategy (see page 49). A
significant part of the strategy was to
implement a staff enterprise agreement
covering the working conditions and
remuneration for our non-executive
members of staff. Despite staff rejecting
this agreement, the Office Executive and I
are fully committed to creating a modern,
competitive, cost effective and flexible
workplace that fulfils our mandate, both
now and in the future.
Another key part of our strategy was
to introduce performance agreements
for all staff supported by a new human
capital management system, delivered
through our MiCareer project (see
page10). Performance agreements are
being finalised and will be in place in early
201516.
Timeliness of NSW Government

agencies' financial reporting
behind other jurisdictions
In 2014, the accuracy of NSW
Government agencies' financial reporting
continued to improve, building on
significant improvements of the previous
year. While timeliness also continues to
improve, it is behind other jurisdictions in
Australia. My office, NSW Treasury and
NSW Government agencies can do more
to achieve earlier reporting timeframes.
The number of audit qualifications of
financial statements and errors in financial
statements submitted for audit remain
low and down on previous years. This is
largely due to the continuing success of
NSW Treasury's early close procedures
allowing accounting and reporting issues
to be resolved well in advance of finalising
the end of year accounts.
NSW Treasurys Financial Management
Transformation Program aims to
further raise the quality of financial
management and financial reporting
across the NSW public sector. I am
very supportive of this program and my
future reports to parliament will comment
on NSW Treasurys progress and on
6
the increasingly important role of Chief

Financial Officers.
I will comment on these areas through the
four themes that shape my financial and
performance audits:
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financial
performance and reporting
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financial
controls
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governance
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service
delivery.
Financial sustainability reporting

by agencies could improve
From 2014, we began including financial
sustainability measures in my reports to
parliament. These measures highlight
NSW Government agencies that are at
risk of not meeting present and future
spending commitments.
Many agencies do not use financial
sustainability indicators, particularly
departments. While financial sustainability
measures may be less relevant for
departments whose operations are
funded through annual appropriations,
they should not be ignored. Service
delivery outcomes can be constrained if
a departments financial management is
poor.
I will continue to explore which long and
short-term indicators are most relevant for
the public sector, and assess and report
on the financial sustainability of agencies.
A more appropriate audit mandate

In recent times, parliament's Public
Accounts Committee and governmentsponsored reviews have recommended
legislative changes to the scope and
nature of my audits to better cover todays
government activity.
The Public Accounts Committee in 2013
recommended that I have 'follow the
dollar' powers. These powers will allow
me to go beyond government agencies
and examine the increasing number of
non-government organisations and other
external service providers that spend
public money. The Commonwealth and
several other State Auditors-General
already have these powers.
councils in New South Wales appoint

their own auditors. In response, my office
has been working closely with the Office
of Local Government to prepare for the
possible transition of local government
audits to the Audit Office. I am confident
we will be ready and will perform well,
should the change go ahead.
A previous Public Accounts Committee
report and the NSW Financial Audit 2011
Report (Lambert Report) recommended
that I have explicit powers to undertake
compliance audits. This recognised
the limitations I have in conducting
compliance audits as performance audits
or as a request from the Treasurer. A
far more efficient way is to allow me to
independently initiate such reviews.
The Lambert Report made a number of
other recommendations including giving
me powers to access cabinet documents;
allowing me to choose not to audit
dormant entities; reducing the number
of days an agency has to respond to a
performance audit; and requiring me to
include agency comments in my financial
audit reports to parliament.
The importance of our people

Finally, Id like to thank everyone at
the Audit Office for their dedication
and professionalism. I continue to
be impressed by the quality of their
work and the ongoing satisfaction of
parliamentarians and our audit clients. This
is achieved through the quality of our staff
and their commitment to our vision and
mission.
A T Whitfield PSM
I encourage the NSW Government to act

on these recommendations.
A new Public Accounts

Committee
The Public Accounts Committee was reestablished on 28 May 2015. Since then I
have updated the committee on my recent
reports.
I am very encouraged by their
commitment to follow up government
agencies on actions taken in response
to recommendations in my AuditorGenerals Reports to Parliament. This is
particularly important as we both have
a key role in assisting parliament hold
government accountable for its use of
public resources.
I look forward to working with the
committee.
In another review, the Independent Local

Government Review Panel: Revitalising
Local Government recommended that
NSW local council audits come under
my control. Currently, local government
7
Office Executive
Experience and performance
The Office Executive provides the leadership necessary for the Audit Office to achieve
its strategic goals. The Office Executive is led by the Deputy Auditor-General and draws on
the expertise of other staff when required
Tony Whitfield
John Viljoen
Kathrina Lo
PSM, B.Comm, FCA
Assistant Auditor-General,
Financial Audit
B.Acc, FCPA
Performance Audit
BEc, LLB, LLM, Grad Dip Leg Prac
John Viljoen joined the Audit Office in

1996, after 18 years in the private sector.
He spent nine years with a Big Four
accounting firm, where he was responsible
for delivering audit services to clients in
Australia and Africa. John is responsible
for financial audit quality and methodology,
technical audit support, information
systems audit and compliance audits.
Before joining the Audit Office in October

2014, Kathrina Lo held senior policy and
legal roles in the NSW public sector, most
recently as Director of Justice Policy in
the Department of Justice. Kathrina also
previously held a number of statutory
and chief executive appointments in
an acting capacity, including NSW
Information Commissioner, NSW Privacy
Commissioner and Chief Executive of
NSW Juvenile Justice.
Before joining the Audit Office in 1994,

Tony Whitfield spent 29 years in the
private sector, including 17 years as an
audit partner in a Big Four accounting
firm. During that time, he was responsible
for delivering audit and other services
to a portfolio of clients, and for audit
technology within the firm. Tony has also
worked in the USA, and is a past NSW
State Chairman of Chartered Accountants
Australia and New Zealand.
Tony was awarded the Public Service
Medal (PSM) in 2015 for outstanding
public service to public sector financial
performance and reporting.
Scott Stanton
Acting Deputy Auditor-General,
Financial Audit
B.Comm, FCPA
Scott Stanton joined the Audit Office in
1987, and has significant experience in
leading the delivery of audit services to
a diverse range of public sector clients
including those in the transport, electricity,
education and university sectors. He is
a previous Chair of CPA Australias NSW
Public Sector Committee and is currently
serving on CPA Australia's NSW Divisional
Council.
Louise Mooney
Corporate Services
LLB (Hons), FCA, GAICD
Louise Mooney commenced her
accounting career with a 'Big Four'
accounting firm as a member of the audit
staff, before moving on to a wide variety
of roles within both public and private
sector service industries in Australia and
overseas. Prior to joining the Audit Office
in 2008, Louise was Finance Director at
The Childrens Hospital at Westmead and
two large Australian law firms.

Tony Whitfield
Financial Audit
B.Bus, CA
Steven Martin joined the Audit Office in
2008 after 18 years with a Big Four
accounting firm where he was responsible
for delivering audit and transaction
services to clients. This included ten
years in Europe where he specialised in
advisory on cross-border transactions
and acquisitions. He also worked as
commercial accountant in the head office
of a blue chip multinational logistics
company based in Sydney.
Bola Oyetunji
Organisational structure at 30 June 2015
Governance
Executive Manager
Barry Underwood
Office Executive
Acting Deputy Auditor-General
Scott Stanton
Financial Audit
Performance Audit
Corporate Services
Assistant
Auditors-General
Assistant
Auditor-General
Assistant
Auditor-General
John Viljoen
Kathrina Lo
Louise Mooney
Steven Martin
Steven Martin
Acting Assistant Auditor-General,

Financial Audit
BSc Economics (Hons), CPA, M Comm
(Finance), SA Fin
Bola Oyetunji joined the Audit Office in
2001 after 14 years with two Big Four
accounting firms in Australia and Africa,
specialising in financial services audits.
He also spent time as Financial Controller
of an Australian-based manufacturing
company. He is responsible for the Audit
Office Risk Management Group and leads
a business team delivering audit services
to a portfolio of clients.
Further details on the role,
management and activities of the
Office Executive can be found on
page 90.
Bola Oyetunji (acting)
8
Back: Bola Oyetunji, Steven Martin, Scott Stanton, John Viljoen, Louise Mooney
Front: Kathrina Lo, Tony Whitfield
Client location Sydney Opera House Trust
9
The year ahead

Our activity in 201516 will be driven by our strategic planning process
and our 4 strategic goals
Strategic planning process
The Leadership Team, made up of the Office
Executive, Financial and Performance Audit
Directors, Corporate Services Executive
Managers and 100 Day Leaders (see page
42) work together to develop clear goals,
strategies and targets for the office. A lead
manager is assigned to a specific strategy
to guide activity, monitor progress against
targets and report achievement against
quarterly deliverables. The Leadership Team
meets every 30 days to review progress on
the plan and set new quarterly deliverables to
achieve the stated strategies.
Vision and mission

Our 201516 strategic implementation
plan is reflective of our vision of Making a
difference through audit excellence and our
mission To help parliament hold government
accountable for its use of public resources.
Our vision aims to deliver better outcomes
for the State and the people of New South
Wales through our audits. To achieve our
vision, we will support parliament to hold
government to account for its use of public
resources through the adoption of our
recommendations.
Business unit plans

Our four business units Financial Audit,
Performance Audit, Corporate Services and
Governance each have a business plan
aligned to the overall strategic focus areas of
the Audit Office.
Strategic focus areas

We have retained the four strategic focus
areas we established in 201415. For each
of these focus areas we set strategies for the
next 12-month period. The overall goals and
supporting strategies are detailed throughout
this report and referenced below, together
with planned activities to achieve these
goals.
Operational Excellence
Goal for 201516:
We operate in a business-like manner with
competitive models for pricing, resourcing
and outsourcing. Our structure and skill mix
is regularly reviewed, to deliver excellent
products in a transparent manner.
Strategies:
}}
Develop a workforce plan
}}
Cut internal red tape to streamline
processes
}}
Demonstrate value for money and
transparency through implementation of
our pricing approach.
Planned activities for 201516 include:
}}
Agree components of a workforce plan
and deliver them
}}
Identify areas of red tape and remove or
refine for efficiency
}}
Publish the Audit Offices new pricing
approach and model.
Strategies:
}}
Operationalise and support new policies
See pages 15, 21, 23, 36, 39, 49, 52, 54,
55, 57 and 61 for further details.
Product Delivery
Goal for 201516:
We have a strong understanding of the
public sector to deliver quality products and
services that have impact and relevance,
and improve client assessment of value for
money.
Strategies:
}}
Ensure audits remain relevant, by focusing
on increasing staff knowledge of the
public sector, and understanding the NSW
Government reform agenda
}}
Ensure we have maximum impact by
continuing a strong focus on stakeholder
expectations in our Auditor-Generals
Report to Parliament.
}}
Communicate key public sector reform
information to staff, by including key
speakers at staff forums
}}
Include measures relating to staff
knowledge of public sector reform in
performance agreements
}}
Implement a renewed media strategy.
See pages 13, 15, 21, 23, 39, 40, 45, 49,
54 and 57 for further details.
Constructive Leadership
Goal for 201516:
Our leaders are agile and adaptable. They
listen and communicate a shared vision and
direction, model constructive behaviours and
set challenging but realistic goals that are
rigorously pursued with enthusiasm.
Strategies:
}}
Implement regular upward feedback for
people managers
}}
Provide further opportunities for people
managers to become constructive and
confident leaders.
}}
Identify key development gaps in people
managers and implement solutions to
close these gaps
}}
Develop and distribute a toolbox to all
staff to guide them in giving and receiving
upward feedback.
See pages 23, 36, 39, 40, 45 and 49 for
further details.
People
Goal for 201516:
We create a constructive and achievement
oriented environment for our people that
requires them to take opportunities to
achieve their potential. Our people are flexible
and receive regular and honest performance
feedback.
and frameworks delivered by Project Blue

(see below)
}}
Identify and support staff in achieving their
career goals
}}
Develop a plan to address key gaps from
our staff opinion survey (see page 36).
}}
Transition the outputs of Project Blue into
business as usual, including ensuring all
staff have performance agreements in
place with performance measures which
directly align to our strategic goals
}}
Remind staff of the number of career
opportunities made available and
encourage them to be involved
}}
Identify and develop solutions for key gaps
in our staff opinion survey, with a particular
focus on issues related to a constructive
culture and work-life balance.
See pages 23, 37, 39, 40, 49 and 52 for
further details.
Strategic projects
Our strategic projects are designed to
achieve our goals. They encompass multiple
streams of cohesive activity and each
operates under a clear governance structure.
They currently include:
}}
Project Blue delivering to our
'People' goal, to provide a modern and

competitive workplace environment, with
flexible and cost effective conditions of
employment, the right staff skill mix, a
method of measuring staff performance,
and appropriate reward and recognition
processes (see pages 36 and 53)
}}
Elite delivering to our 'Operational
Excellence' goal, to develop a new
practice management system with an
end-to-end solution from time entry to
debt recovery
}}
Retain delivering to our 'Operational
Excellence' goal, this project will
implement a new resource scheduling tool
to simplify the management and allocation
of our people resources which will allow
greater visibility of staff allocation to audit
clients, supporting better staff utilisation
}}
MiCareer delivering to our 'People'
goal, to provide the Audit Offce with a
human capital management system which
gives staff clearly defined and consistently
communicated performance expectations,
which align to personal, team and Audit
Office goals, as well as remuneration. We
will progressively add modules integrating
learning management and social

interaction.
10
Parliament
Regularly seeks and uses our advice
The Auditor-General and the Audit Office of New South
Wales assess the performance and accountability of
NSW Government agencies by:

reporting

working
Location NSW Parliament
to the NSW Parliament on our audits
closely with parliamentary committees
Satisfaction
Parliamentarians satisfied with reports and services
94% satisfied overall with our reports and services

100% believe we provide valuable information on public sector performance
We continually strive to ensure

parliamentarians value our work and
that we meet their expectations. We are
committed to enhancing our public sector
knowledge to ensure our work is relevant
and impactful, as driven by our Product
Delivery strategic focus area in 201415
(see page 10).
In 2015, our scheduled survey of
parliamentarians coincided with the March
2015 State election. We deferred the
survey to early 2016 as the participation
rate would likely have been low during
the caretaker and settling-in period after
the election. Our focus at the end of
201415 and into 201516 is on building
an effective relationship with the new
Public Accounts Committee (see pages
7 and 18). Fortunately, the 2014 survey
results are current enough to give us a
reasonable indication of parliaments view
of our recent work.
This 2014 survey of parliamentarians was
conducted over three months in April,
May and June. Twenty-five per cent of
We are proud of parliamentarians

continued overall satisfaction with the
Audit Offices reports and services.
Ninety-four per cent were satisfied in
2014, a drop from 98 per cent in 2013.
Parliamentarians were particularly positive
about:
}}
the
Audit Office performing audits

with integrity, with 100 per cent in
agreement, up from 94 per cent in 2013
}}
our
financial audit reports assisting

parliamentarians to monitor the
accountability and financial performance
of the NSW public sector, with 97 per
cent agreeing, up from 91 per cent in
2013
}}
the
Audit Office providing high quality

reports and services, with 97 per cent
agreeing, similar to 98 per cent in 2013
}}
our
reports and services providing

valuable information on public sector
performance, 100 per cent agreeing,
consistent with 100 per cent in 2013.
These survey results also provide us with

clear areas for improvement. While nine in
ten parliamentarians provided very positive
ratings on all aspects of our reports and
services, there were two clear messages
we have since been focusing on.
Parliamentarians suggested we improve
the clarity of our reports and provide more

advice and information to address their
needs.
We have also been working on improving
parliamentarians' views that we operate
independently from government, which
was down from 100per cent in 2013 to
91 per cent.
Financial audit reports rate highly

Parliamentarians rate the Auditor-Generals
Reports to Parliament on financial audits
highly. Almost all parliamentarians who
had referred to financial reports provided
a positive rating on all aspects of the
reports.
Ninety-seven per cent of parliamentarians
who responded agreed the reports clearly
communicated the significant issues and
their implications, consistent with 96 per
cent in 2013.
The results reflect our ongoing work
in improving layout and design, with
97 percent of respondents agreeing
our reports were effectively presented,
consistent with 98 per cent in 2013.
Ninety-seven per cent found them easy to
understand, up from 95 per cent in 2013,
maintaining the positive trend in this area.
Satisfaction with financial audit reports %
Satisfaction with performance audit reports %
Survey not conducted in 2011 or 2015 due to election years.
Survey not conducted in 2011 or 2015 due to election years.
83
88
93
96
97
95
92
92
85
91
97
95
94
93
87
89
94
95
70
65
61
59
Communicate issues
and implications
Monitor accountability
and performance
Communicate issues
and implications
2013
2012
52
2010
2009
2016 TARGET
2014
2013
2012
2010
2009
2016 TARGET
2014
2013
2012
2010
2009
2016 TARGET
2014
2013
2012
2010
2009
53
Addressing key areas
12
2016 TARGET
Our mission is to help parliament hold

NSW Government accountable for its use
of public resources, and it is critical that
we understand parliamentarians views
of our performance through their direct
feedback on our reports and services.
parliamentarians responded, as compared

to 33 per cent in both 2012 and 2013.
2014
Satisfaction remains high
Performance audit satisfaction

improved
Our reports and services rate

above other audit offices
Parliamentarians continue to rate the

Auditor-Generals Reports to Parliament
for performance audits highly, with results
generally consistent with 2013. Around
nine in ten parliamentarians who had
referred to the performance audit reports
provided positive ratings for all aspects
relating to them. Fifty-two per cent of
parliamentarians felt the performance
audits were addressing their key areas of
interest to a high or very high extent, down
from 59 per cent in 2013. This is an area
we would like to improve next year and we
were pleased parliamentarians took the
opportunity to suggest topics for future
performance audits.
Since 2005, we have been comparing

our parliamentarian survey results against
results from other participating Australian
audit offices. In 2014 (the last survey
results available at time of publication),
the Australian National Audit Office and
the audit offices in Queensland, Tasmania,
Victoria and Western Australia participated
in the benchmarking survey.
Satisfaction with our performance

audit reports' layout and design
continues to improve with 93 per cent
of parliamentarians agreeing, up from
90 per cent in 2013. Ninety-three per
cent agreed that reports were easy to
understand, consistent with 92 per cent
in 2013. Ninety-four per cent agreed the
reports clearly communicated significant
issues and implications, an increase from
89 per cent in 2013. Improving our reports
was a particular focus in 201415, with
performance auditors receiving advanced
report writing training and coaching.
On an overall measure of satisfaction with

reports and services, 94 per cent of our
parliamentarians were satisfied. This is a
drop from 98 per cent in 2013, but well
above the 88 per cent average of other
participating audit offices.
We rated above or in line with the average
of the six audit offices for the other three
key areas, Provide valuable information on
public sector performance, Help improve
public sector administration, and Reports
communicate issues clearly. One hundred
per cent of our parliamentarians believed
we provide valuable information on public
sector performance, compared to the
94per cent average. Ninety-two per cent
believed we communicate issues clearly,
in line with the average of 91 per cent.
Ninety-one per cent believed we help
improve public sector administration, well
above the average of 87 per cent.
The year ahead

Through our Product Delivery
strategic focus area, we will work
towards continued satisfaction from
parliamentarians, ensuring:
}}
we
build on our knowledge of public

sector reforms and government
priorities
}}
we
deliver products and services that

are relevant and have impact
}}
we
maintain effective stakeholder

relationships with parliamentarians and
establish a positive relationship with the
new Public Accounts Committee (PAC)
(see page 18)
}}
we
strengthen government
accountability through our collaborative
relationship with the PAC
}}
we
live up to stakeholder expectations

and fulfil our mandate.
(See page 10 for further details

of our strategic focus areas.)
Satisfaction compared with other participating Australian audit offices

Survey data from 201314. Survey not conducted in 201415 due to election year.
Audit Office of NSW Other participating Australian audit offices

Overall satisfaction with reports
and services
Provide valuable information on public
sector performance
Help improve public sector administration
Reports communicate issues clearly
94%
88%
100%
94%
91%
87%
92%
91%
13
Assurance
Our financial audits provide assurance to parliament
436 financial audits and 70 other assurance audits and reviews completed
2 new modified audit opinions issued and 6cleared
qualified opinions on agency financial

statements
}}
1 disclaimed opinion on an agencys
financial statements
}}
1 qualified conclusion on a compliance
audit
}}
2 qualified conclusions on a compliance
review
}}
1 qualified opinion on an Australian
Financial Services Licence (AFSL) audit
}}
1 qualified opinion on Basic Financial
Statements prepared in accordance
with US Generally Accepted Accounting
Principles (GAAP).
436
2013
2014
2015
2012
425
Modifications of audit opinions or review

conclusions can be qualified, adverse or
disclaimed:
modifications and encourage the agencies

concerned to act on our recommendations
to address the underlying causes.
}}
Qualified
New modifications
opinions and conclusions

are issued when financial statements
contain material misstatements or
sufficient appropriate audit evidence is
not available; and the impact is material
but not pervasive
}}
Adverse
opinions and conclusions

are issued when misstatements in the
financial statements are material and
pervasive
We issued two new modified opinions in

201415. For details of these modifications
see page 25.
Modified audit opinions as percentage
of total audit opinions
6
5
}}
Disclaimed
opinions and conclusions are

issued where sufficient appropriate audit
evidence is not available and the effects
may be material and pervasive.
Repeat modifications
During 201415, we issued eight repeat
modifications, three fewer than last year.
We continue to notify parliament of these
2015
}}
4
435
2014
During the year we issued ten modified

audit opinions and conclusions
twopercent of the total opinions and
conclusions on assurance engagements
(see pages 25 and 26). These modified
opinions and conclusions included:
452
2013
Modified auditors opinions

and conclusions
472
2012
We completed 436 financial audits this year

compared to 425 last year.
We also provided 70 other assurance

audits and reviews (57 last year) to help
agencies attest compliance or acquit their
grant revenues. The Treasurer requested
we review the mid-year and annual budget
process in 201415. Our reviews focused
on the reasonableness of estimates
and forecasts used by NSW Treasury in
preparing the 201415 Half-Yearly Review
and the 201516 Budget Papers.
Number of audited entities
2011
Parliament requires reliable information

on the operation of NSW public sector
agencies. We provide parliament with
independent audit opinions on agencies
financial statements, increasing their
reliability and credibility. Our audits comply
with professional quality and independence
requirements as parliament needs to be
assured our audits are independent. A
strong demonstration of our independence
is that we do not provide non-audit
services that other accounting firms
provide.
In addition to audits of individual agencies,

we audit the financial statements at the
whole-of-government level, the Total State
Sector Accounts. These accounts provide
financial information to parliament on a
Statewide basis, for example total State
borrowings.
2011
Providing an independent opinion
Comparing costs with other audit offices
Cost per financial audit opinion ($000)
We compare our financial audit costs with other Australian audit

offices. In 201415, our cost per financial audit opinion was
$84,024, five per cent more than last year. Consistent with recent
years, our cost per financial audit opinion was slightly higher than
the average of other Australian audit offices.
Audit Office of NSW Average of all Australian audit offices

71
67
2011
73
74
2012
78
75
2013
80
78
2014
84
83
2015
14
Timeliness of reporting
to parliament
The results of our 2014 financial statement
audits were reported to parliament
in 15 volumes of the Financial Audit
Auditor-Generals Report to Parliament in
201415.
One volume focused on major themes
from audits in the previous calendar year,
while another two focused on members
of parliament and their entitlements. The
remainder focused on a particular cluster
or industry in the current year. All volumes
included significant issues and activities
broadly classified into financial reporting,
financial controls, governance and service
delivery.
We recognise parliament and other

stakeholders need timely reports to help
prompt scrutiny of agencies financial
position and performance. For the first
time all our financial audit Auditor-General
Reports to parliament were on time.
For agencies with a 30 June balance
date (most of our clients) our internal
benchmark is to report to parliament
before the end of the calendar year. Our
other financial audits (mainly universities)
have a 31 December balance date and
our reporting to parliament benchmark is
by the end of May each year.
and Communities
}}
Electricity
and Water
}}
Family
In 201516, we will continue to provide

assurance to parliament by focusing on
the following initiatives in our Product
Delivery strategic focus area.
Product Delivery
}}
We
will ensure audits remain relevant,

by focusing on increasing staff
knowledge of the public sector, and
understanding the NSW Government
reform agenda
}}
We
will have maximum impact

by continuing a strong focus on
stakeholder expectations in our AuditorGenerals Reports to Parliament.

Volumes published covered:

}}
Education
The year ahead
and Community Services
}}
Health
}}
New
South Wales State Finances
}}
Parliamentarian
}}
Planning
}}
Police
and Environment
and Justice
}}
Premier
}}
Trade
Entitlements
and Cabinet
and Investment
}}
Transport
}}
NSW
Treasury and Finance (including

Superannuation and Insurance)
}}
Universities.
30 June audits reported

by end of December %
100
100
100
100
100
2014
2015
2016 TARGET
2014
100
2013
2013
100
2012
97
2016 TARGET
98
2015
96
2012
Reports to parliament
31 December audits
reported by end of May %
15
Effectiveness, efficiency and economy

Our performance and financial audits help parliament assess agency performance
11 performance audits completed
Performance audits aim to inform

parliament and the public about how well
government programs are delivered and
to ultimately improve public administration.
They examine whether taxpayers
money is spent efficiently, effectively,
economically and in accordance with
the law. These audits may review all or
part of an agencys operations. Some
audits consider particular issues across
a number of agencies. Where we find
performance gaps, we make practical
recommendations to improve service
delivery and efficiency.
We reported on 11 performance audits in
201415. In those 11 reports, we made
99 recommendations to improve public
administration. Eighty-six per cent were
unequivocally accepted.
In 201415, our Performance Audit team

was restructured to remove a layer of
management, devolve responsibility and
increase efficiency (see page 42). The new
structure will position us to meet our target
in 201516 of delivering 16 performance
audit Auditor-General's Reports to
Parliament.
The extracts in the box below from
published agency responses to our
reports indicate the value they attach to
our recommendations in improving public
administration.
Adding value to parliament

Parliament is our primary stakeholder
and our work supports its role in holding
the government to account. Our reports
are frequently referred to in parliamentary
debates and in budget estimates hearings.
Parliament is an important source of
suggestions for performance audit topics
and audits required by specific legislation.
We conducted one such statutory
audit during the year our review of
government advertising (see page 32).
Department of Health:
The performance audit was helpful and gave the department the opportunity to reflect
and note its achievements.
The value we add to the parliamentary

process is illustrated by the comments
made by parliamentarians in our most
recent 201314 survey:
'The Audit Office does a very good

job with useful advice for government
administration.'
'The Audit Office demonstrates
good performance and a healthy
relationship with the parliament's
Public Accounts Committee.'
'I have been very happy with the
Audit Office's work, please keep
it up!'
See page 12 for more information on the

parliamentary survey.
Number of performance
audits completed
Your report highlights elements of good practice and the Audit Offices Better Practice
Checklist for Monitoring and Reporting on Performance Audit Recommendations is a
valuable resource for agencies.
I am pleased to inform you that the department accepts the reports recommendations
and is actively improving current processes. The department is committed to
strengthening accountability through continuous monitoring and reporting on
performance audit recommendations.
16
13
12
11
9
8
2015
2014
2013
2012
I agree with all ten recommendations of your report, which will improve documentation,
transparency, data management systems, program management and include
publication of an annual report disclosing the programs effectiveness, efficiency,
achievements and outcomes.
2011
Department of Industry, Skills and Regional Development:
2016 TARGET
Helping to improve
public administration
I have therefore approved an implementation plan of your recommendations with

timelines which will be regularly monitored through the audit committee of the
department.
Department of Education:
The performance audit has provided the department with the opportunity to reflect on
the achievements of the Learning Management and Business Reform program and to
focus on lessons learnt and areas for improvement. This has proven to be useful as the
program closes Stage 2, and undertakes detailed planning for Stage 3.
I would like to thank the Audit Office review team for their work on this audit and their
willingness to liaise with the department prior to finalising the report.
16
Cost of performance audits

The average cost of performance audits
published in 201415 was $307,857.
The cost increase over the previous year
was due to extra time spent on audits.
A major factor in this was the restructure
in Performance Audit (see page 42),
where departing staff handed over their
audits to remaining or new staff thereby
creating additional work. The cost also
reflects the complex subject matter and
wider coverage, including multiple agency
audits, for example:
}}
WestConnex:
Assurance to the
Government
}}
Large
Construction Projects:
Independent Assurance
}}
Implementing
Performance Audit
Recommendations.
We also conducted audits on complex

and difficult issues, including our audit
Security of Critical IT Infrastructure (see
page 28 for details of our performance
audits).
Reporting on agency
performance information
Financial and performance reporting is an
important aspect of good governance.
Government requires accurate and timely
financial and performance information
from agencies to enable effective
decision-making and to allow efficient and
economical delivery of services. During
201415, our financial audit AuditorGeneral's Report to Parliament included
comments on agencies performance
indicators, as well as recommendations for
financial and operational improvements.
We believe publishing key performance
information offers parliament a balanced
report card on agencies performance.
Such information helps the people of New
South Wales assess whether their tax
dollars have been spent efficiently and
effectively.
The year ahead

In 201516, we will build on our
recent efforts to further target areas of
government focus and of strong public
interest.
The 201516 audits will also see a
stronger focus on governance across
key principles of our revised Governance
Lighthouse (see pages 48 and 58).
This will include assessing the risk
management maturity of a wider number
of agencies and updating our previous
work on fraud and corruption control.
We are also working closely with the Office
of Local Government to prepare for the
possible transition of local government
audits to the Audit Office. This is an
exciting time for the Audit Office and we
will be well-prepared if this change should
go ahead.
Our three-year audit program

We published our latest three-year
performance audit program in July 2014.
This program focuses on the NSW
Government's State Plan NSW 2021 and
key public sector reforms. Our audits will
examine such reforms as government
sector employment, the transition of
out-of-home care services from the
government to non-government sector
and major projects such as the South East
Sydney Light Rail Project and the Service
NSW initiative.
300
2015
2016 TARGET
219
233
2014
175
2013
To view our three-year program visit

www.audit.nsw.gov.au/audit-program/
performance-audit-program.
308
266
2012
Alongside this program, we continue to

work with the new government and Public
Accounts Committee (see page 18), to
continue to focus on issues of importance.
Our program is sufficiently flexible to allow
us to respond to any emerging priority
issues, and is regularly reviewed and
updated (see page 27 for more details).
Average cost
of performance audits $000
2011
In more complex audits, Performance

Audit draws on support from senior
management and from expertise and
disciplines across the office. This provides
industry knowledge, agency liaison and
data analysis. Performance audits also
use specialist advisers for cultural advice,
survey design, industry expertise, research
and analysis. In 201415, three external
advisors were used.
17
Parliamentary response to our work

Promoting improvements
Supported the Public Accounts Committee in following up 10 earlier performance audits

Parliament follows up on agency
progress in implementing our
recommendations
The Public Accounts Committee
(PAC) holds agencies to account for
implementing the actions they agree
in response to performance audit and
financial audit recommendations. It does
so through follow-up inquiries conducted
a year after the reports are tabled. The
PAC makes further recommendations for
action when it considers them necessary.
In 201415, it completed three inquiries
on reports we tabled in 201213, following
up on ten of our performance audits and
repeat recommendations we made in our
2013 financial audit Auditor-General's
Reports to Parliament.
In November 2014, the Chair of the
PAC said in his foreword to its report
Examination of the Auditor-Generals
Performance Audit Report May 2013
July 2013:
Overall, the committee was satisfied

with the response of agencies to
these performance audits. It is clear
to the committee that agencies have
taken the Auditor-Generals findings
seriously, with most recommendations
being accepted. On this note, the
Committee was pleased that NSW
Ministry of Health has included
addressing recommendations made
by the Auditor-General in its contracts
with chief executives.
This report makes 12 recommendations
designed to improve the performance
of government agencies. Most of these
recommendations go to matters already
identified by the Auditor-General. The
committee would like to see more
timely action in some areas, but we also
recognise that agencies may encounter
legitimate delays.
Case study
Public Accounts Committee
The Public Accounts Committee (PAC) plays a key role in public
sector accountability. One of the tools the committee has at its
disposal is the financial and performance audit reports tabled by
the Auditor-General.
In November 2014, the PAC released its Examination of the
Auditor-General's Performance Audit Reports May 2013
July 2013. The purpose of the performance audit reviews
is to follow up on action taken by agencies in response to
recommendations made by the Auditor-General.
As part of the review process, the PAC seeks details from
agencies about their response to the Auditor-Generals
recommendations and may, if required, hold public hearings.
The Auditor-General also has the opportunity to provide
comments on agencies submissions.
The PAC was satisfied that the agencies in question had taken
the Auditor-Generals recommendations seriously, and that
most had been accepted. However, the committee did make 12
further recommendations, mostly on matters already raised in
our performance audit reports and commented that it would like
to see more timely action from agencies, while acknowledging
legitimate delays.
The year ahead

In 201516, we plan to further strengthen
our support to parliament and the PAC by:
}}
developing
a strong relationship with

the new Public Accounts Committee
}}
supporting
changes to the Public

Finance and Audit Act 1983 which
strengthen our efficiency and
independence
}}
continuing
to respond promptly
and thoroughly to all requests from
parliament for Audit Office support,
including all audit suggestions
}}
producing
16 performance audit
reports.
Also in November, the PAC released its Follow-up of

Repeat Recommendations from the Auditor-General's 2013
Financial Audit Reports. The PAC asked agencies to provide
details of their responses to the Auditor-Generals repeat
recommendations.
The committee noted its pleasure that agencies had taken
the recommendations seriously and had put significant effort
towards their implementation. The fact that several of the
agencies responses detailed significant savings made as a
result of the recommendations highlights the benefits of the
Auditor-General's Reports to Parliament to the people of New
South Wales, and the PACs actions in following up agencies.
The report identified five areas where further work or clarification
was required to ensure that the full benefit of the AuditorGenerals recommendations are realised.
Following the State election, the PAC was reconstituted with
a new Chair and new members. Since the election, we have
proactively sought opportunities to provide briefings to the
committee on our reports. We have also agreed to continue to
provide briefings to the committee on each report as it is tabled.
18
Agencies
Act on our recommendations and regularly
seek our advice

We
work collaboratively with our financial audit

clients and performance auditees

Together
Greg Parkes Audit Leader / Monique Barns Acting

Executive Manager, Communications and Business
Support / Roopal Rachna Audit Leader
Client location Taronga Zoo
with our financial audit clients we identify

opportunities to improve financial reporting
and management

Our
performance audits examine agency programs

critically in order to identify potential improvements
Agency response to our work

Our audits continue to be well regarded
Overall performance index for CFO satisfaction remains high at 74

Performance auditees overall performance index satisfaction decreased to 70 from 74
Satisfaction with our services
Surveying our clients
Each year, we measure our audit clients

satisfaction with our services through a
survey. The survey results and feedback
provide valuable information on our
performance and forms part of our
stakeholder engagement strategy.
Our overall performance index for

performance auditees was 70 per cent, a
decrease from last years 74 per cent.
ARC Chairs agreeing that senior staff were

appropriately involved in the audits, up
from 93per cent in 2014.
Satisfaction with audit process
Satisfaction with the performance audit

process dropped
Financial audit satisfaction highlights

areas for improvement
We use an independent research

company to conduct the survey for us
and clients have the option of responding
anonymously.
In 201415, for our financial audit clients,
we invited 180 agency Chief Financial
Officers (CFOs) and 107 Audit and Risk
Committee Chairs (ARC Chairs) from
top tier agencies, to participate. We
achieved similar response rates to last
year, with responses from 70 per cent of
CFOs, down from 74 per cent, and from
75percent of ARC Chairs, an increase
from 73per cent last year.
While overall satisfaction with our audit

process was in line with last year, with
a score of 77 per cent compared to
79percent in 2014, there were mixed
results from CFOs. A total of 97percent
agreed that our auditors had the
professional skills and knowledge required
to conduct the audit, up from 91 per cent.
Ninety per cent agreed that senior staff
were appropriately involved with the audit,
up from 86 per cent.
The overall performance index for CFO

satisfaction remained positive at 74, down
from 75. ARC Chairs reported the highest
level of satisfaction since 2012, with a very
positive 83 per cent satisfaction, up from
81 per cent last year.
There was a drop from 93 per cent to

84 per cent, in the number of CFOs
who agreed our auditors communicated
effectively with them. While a positive
result, the 81 per cent of CFOs who
believed their organisation was promptly
informed of significant issues identified
during the audit, was a decrease from
92 per cent last year. There was also a
decrease in the rating of our auditors
being responsive to client needs, down
from 86 per cent to 77 per cent.
For our Performance Audit auditees, we

invited 30 agency contacts to respond
to the survey and received a very strong
response rate of 83 per cent.
There were ratings of 94 per cent or higher

across all aspects of our audit process
from ARC Chairs. The most significant
increase was achieved with 99 per cent of
Financial audit clients (CFO only)*

*(for valid comparison, results have been
weighted from 2012 onwards)
There was a decline from 88percent to

75per cent in the number of respondents
who agreed that they were promptly
informed of significant issues or findings as
they arose during the audit.
Positvely, the percentage of respondents
agreeing that our auditors demonstrated
the professional skills and knowledge
to conduct the audit showed the
biggest increase, up from 70 per cent to
83percent.
81
71
*(for valid comparison, results have been

weighted from 2012 onwards)
20
75
2016 TARGET
66
2014
75
68
2015
75
2013
74
2012
78
2011
74
2016 TARGET
75
2015
76
2014
75
2013
2015
2014
2013
2012
72
2012
78
73
2016 TARGET
81
72
2011
75
2016 TARGET
77
2015
79
2014
77
2013
77
2012
2011
76
There was a decrease from 100 per cent to

96 per cent, in the number of respondents
agreeing our auditors were professional,
and a similar decrease, to 92 per cent,
in respondents agreeing our auditors
communicated with them effectively.
Satisfaction with audit reporting %
2011
Satisfaction with audit process %
Results for satisfaction with the audit

process dropped in 201415 to
72percent from 78percent.
Satisfaction with audit reporting

Room for improvement with management
letters
While CFOs still reported high levels of

satisfaction with all aspects of our audit
reporting, there were significant decreases
in some areas. Ninety-three per cent
agreed the Auditor-Generals audit opinion
was issued in a timely manner, down
from 95 per cent. Ninety-one per cent,
down from 96 per cent, agreed they had
adequate opportunity to comment on
the audit findings and issues before the
management letters were formally issued.
Eighty per cent of respondents agreed the

tabled report was factually accurate, up
from 67 per cent, and 76 per cent agreed
the tabled report was balanced and fair,
up from 71 per cent in 2014.
A total of 50 per cent of respondents
agreed the media release was balanced
and fair, down from 62 per cent, whereas
70per cent agreed that the media
release clearly communicated the key
audit findings and issues, down from
73percent.
Satisfaction with audit value

Positive contributions to client
organisations
However, regarding management letters,

80 per cent of CFOs agreed there were
no surprises (that is, their organisation
was kept informed of likely findings and
issues), a decrease from 94 percent.
Similarly, 79 per cent agreed that
management letters were issued in a
timely manner, down from 90 per cent.
The ARC Chairs were more positive
regarding management letters, with
99 percent agreeing they clearly
communicated audit findings and issues,
and 91 per cent agreeing they were issued
in a timely manner, increases from 97 and
88 per cent respectively.
Our performance audit reports are valued
High scores on the reporting process were

counterbalanced by sizeable decreases
relating to our media releases. One
hundred per cent of respondents agreed
that they had adequate opportunity
to comment on the audit findings and
issues before the final report was tabled
in parliament, an increase from 92 per
cent. Eighty-four per cent agreed that the
tabled audit report communicated the
audit findings and issues clearly, up from
71 per cent.
CFOs acknowledged both the value of

the assurance obtained from the audit
of statutory financial statements, up
from 89 percent to 94 per cent, and our
recommendations to improve financial
management and internal controls, up
from 81 per cent to 82percent. The
percentage of CFOs who agreed our
audit services provide value for money
increased from 58 per cent to 62 percent,
while 58 per cent agreed that our fees
are reasonable relative to the scale,
complexity and financial risk of their
operations, a rise from 52 per cent.
Almost all ARC Chairs agreed that they
value the assurance obtained from the
audit, with the score of 99 per cent
mirroring 2014. The same number
agreed they value our recommendations
to improve financial management, an
increase of eight per cent. Regarding
our audit services, 76 per cent agreed
they provide value for money, up from
69percent.
Satisfaction with audit value %
73
70
2011
2016 TARGET
2015
2014
2013
2012
2011
64
67
66
70
There was an overall improvement in our

auditees rating of our value. The biggest
increase related to the audit helping to
improve the performance of the audited
activity, with 75 per cent of respondents
agreeing, up from 65percent. Views on
timing were positive, with 63 percent
agreeing that it was an appropriate
time to undertake the audit, an increase
from 59 per cent. Fifty-eight per cent
of respondents agreed that the audit
provided a balanced assessment of the
management of activity, compared to
50per cent in 2014.
Compare favourably with other

audit offices
We have been comparing our client
satisfaction with other Australian audit
offices since 2005. In 2014 (the latest
survey results available at time of
publication), our financial and performance
audit report results were benchmarked
against those of the audit offices in
Queensland, Tasmania, Victoria and
Western Australia, as well as the Australian
National Audit Office.
When compared with these other audit
offices, our financial audit clients were
mostly satisfied. They agreed our reports
to parliament help improve public sector
administration (91 per cent, compared
to an average of 86 per cent), and our
management letters clearly communicated
the significant issues and their implications
(94 per cent, the same as the average
score). Ninety-two per cent of our
performance audit clients agreed they
were provided with adequate opportunities
to comment on the audit findings and
issues before the final report was tabled in
parliament, equalling the average score.
In all other areas, our scores were broadly
in line with the average of the other audit
offices.
The year ahead
60
*(for valid comparison, 2012 results have been

weighted from what was reported last year)
2016 TARGET
70
2015
68
2014
67
2013
69
2012
69
Performance audit value improved
We will continue to deliver products,

such as the pricing approach and
benchmarking model which were
implemented this year, to provide clients
with more information about our services.
Specifically, through two of our strategic
focus areas, 'Operational Excellence
and Product Delivery, we aim to deliver
exceptional and professional services and
products to our clients.
(See page 10 for further details of our
strategic focus areas.)
21
Influencing for impact

Our work is topical, relevant and has high impact
96% of our financial audit and 86% of our performance audit recommendations accepted
Improving public sector
accountability and performance
Our audits identify opportunities for
improving public sector accountability
and performance. We develop
recommendations in consultation with
agencies in response to our audit
findings. Our recommendations are
reported to the agencies involved and,
for the more significant matters, to
parliament. Most agencies agree with our
recommendations.
Of the 502 recommendations we made
to our top 50 financial audit agencies
in 201415, 480 (96 per cent) were
accepted by the agencies, above our
target of 95 per cent. Eighty-six per cent
of performance audit recommendations
were accepted, the same as last year.
The more strategic recommendations take
time to implement. However, it is pleasing
to see continuing progress in 201415 on
recommendations made in earlier years,
as the following case studies highlight.
Case studies
Management of Historic
Heritage in National Parks
and Reserves Office of
Environment and Heritage
Fitness of Firefighters Fire

and Rescue NSW and NSW
Rural Fire Service
In May 2013, we published a

performance audit report on the
management of historical heritage
assets in national parks and reserves.
In 201415, in response to the
recommendations in the report, the
Office of Environment and Heritage
developed a draft heritage strategy
to guide public sector agencies in the
long-term management of historic
heritage assets. This strategy will guide
the development of a National Parks
and Wildlife Service Historic Heritage
Asset Strategy which will:
}}
set
out how the National Parks

and Wildlife Service will improve its
management of historic heritage
assets
}}
identify
priorities for investment, and

to also identify assets suited to a
lower leve of maintenance.
The Office of Environment and

Heritage also commenced a review of
permissible uses for assets under the
National Parks and Wildlife Act 1974,
to consider better usage, for example,
by allowing broader private sector use.
Our 2014 report looked at the

physical fitness of firefighters in
New South Wales. As a result of the
recommendations contained in the
audit, Fire and Rescue NSW has
taken steps to implement a health and
fitness standard, underpinned by a
compulsory assessment program for
all firefighters. The program has been
negotiated, in consultation with the Fire
Brigade Employees Union, into the
Crown Employees (Fire and Rescue
NSW Firefighting Staff Death and
Disability) Award 2015.
Fire and Rescue NSW expects this
compulsory assessment program to
commence in late 2015.
The NSW Rural Fire Service has
drafted a Health and Fitness Plan
which is currently in the consultative
phase with its Work Health and Safety
Harmonisation Working Group. This
group includes management, staff and
volunteer representatives.
It has also taken specific action to
include the fitness of fire fighters into
its ongoing corporate planning cycle.
Recommendations accepted %
Financial audits
86
2015
90
2016 TARGET
86
2014
97
2013
98
2012
98
2011
95
2016 TARGET
96
2015
97
2014
97
2013
95
2012
2011
97
Performance audits
22
Timeliness
Timeframes for reporting to agencies
83% of financial audit opinions issued within ten weeks

Financial audit timeliness needs
to improve
A year of change led to some

longer performance audits
We have a target of issuing all financial

audit opinions within ten weeks of
receiving agencies financial statements.
Eighty-three per cent of our opinions were
issued within ten weeks in 201415,
an improvement of fourpercentage
points, although still some way off our
100 per cent target. Our goal may seem
ambitious, but in the interests of public
sector accountability it is necessary. The
earlier we give agencies our audit opinions
and management letters, the sooner
they can make a decision around our
recommendations.
The time to complete performance audits

depends on the scope and number of
agencies involved. In the past year we
have made a concerted effort to reduce
the length of time to complete audits.
The proportion of total opinions issued on

or before 30 September for our 30 June
clients (that is, all government agencies
except for government universities)
improved in 201415 (from 58 per cent
in 201314 to 64 per cent in 201415).
This significant improvement from two
years past (43 per cent in 201213), still
represents unsatisfactory performance.
Some audits took longer than planned

because they had to be taken over
by other staff, who had to come up to
speed with the topic and develop new
relationships with agency staff. There
were also flow-on effects, where more
senior staff had to take on additional
audit responsibilities while vacancies were
filled, reducing the time they could spend
on their existing audits. Despite these
challenges, we achieved a reduction in
elapsed time from an average of ten to
nine months.
Audit opinions within 10 weeks %
with clients and central

agencies to achieve improved quality
and timeliness of financial and
performance audit reports
}}
using
stakeholder feedback to maintain

effective relationships
}}
delivering
value through the right skills,

resources and structure of audits,
resulting in improved timeliness of audit
opinions and management letters
}}
continuing
to develop constructive
behaviours which foster high-achieving
teams, led by a strong Leadership
Team.
(See page 10 for further details of our

Management letters to clients

within 6 weeks %
100
79
83
64
61
2013
2012
2011
2016 TARGET
2015
2014
51
56
46
2016 TARGET
78
2015
74
100
2014
75
2013
A significant strategy for improving

quality is NSW Treasurys requirement
for agencies to perform early close
procedures. We reviewed the outcomes
of agency early close procedures and
provided feedback before their year-end
financial statements were submitted for
audit allowing them to correct identified
misstatements.
}}
working
The restructure is now largely complete,

and the new structure should increase
future efficiency and lead to shorter
elapsed audit times.
2012
We continue to report our concerns about

the quality and timeliness of financial
reporting across the sector. High quality
and timely financial reporting is essential
for the government to make informed
decisions. We continued with our strategy
of following NSW Treasury's program
to improve the quality and timeliness
of financial reporting in response to our
recommendations. Enhanced early close
procedures and active engagement with
CFOs and Audit and Risk Committee
Chairs have promoted the importance of
accurate and timely financial information.
In 201516, we will focus on the

timeliness of our audit output through
innovation and streamlined processes
within our Operational Excellence',
Product Delivery, Constructive
Leadership and 'People' strategic focus
areas by:
The publication of a three-year audit

program, and earlier consultation with
agencies on upcoming audits, has helped
to mitigate the increase in elapsed time
resulting from the restructure.
2011
We aim to issue our management letters

within six weeks of issuing our respective
audit opinions. In 201415, we achieved
56 per cent, an increase from last years
46 per cent. We are developing strategies
to significantly improve the timeliness of
our management letters.
Long elapsed times can also be caused

by unplanned factors delays requested
by agencies, revisions of scope, and
changes in personnel at agencies and
within the audit team. During the year, the
Performance Audit restructure (see page
42) and resulting vacancies impeded our
efforts to reduce audit duration.
The year ahead
23
Our financial audits

Providing value to our financial audit clients
2 new modified audit opinions issued and 6 cleared

What are financial audits?
Financial audits provide independent
opinions on NSW Government
agencies financial statements. They
identify whether agencies comply with
accounting standards and relevant laws,
regulations and government directions.
Additional financial audits are undertaken
each year on the General Government
and Total State Sector Accounts.
Financial statement audits also highlight
opportunities for agencies to improve their
accounting and financial systems.
Financial audit clients

per sector %
3 1
26
10
Our client base
15
11
We completed 436 financial audits of

NSW Government agencies in 201415
(see Appendix Two for the full list of
our clients). These agencies collected
income of approximately $97 billion,
spent approximately $87 billion and
managed more than $424 billion in
assets. They provide a diverse range
of services and vary in size from large
government departments, universities,
State superannuation entities and utilities,
to small boards and trusts.
Number of new modifications
NSW General Government

and Total State Sector opinion
For the second consecutive year, the
General Government and Total State
Sector Accounts received an unqualified
auditors opinion following more than a
decade of qualifications. This outcome
shows the governments commitment to
improve the quality of financial reporting
across the NSW public sector. Compared
to previous years, there were fewer errors
in agencies 201314 financial statements
submitted for audit and used for whole-ofgovernment financial reporting.
11
26
Education and universities
15
Health
11
Finance and services
11
Premier and cabinet
10
Trade and investment, regional
infrastructure and services
6 Justice
6 Planning and environment
6 Transport and ports
5 Electricity and water
3 Family and community services
1 NSW Treasury
Number of modifications cleared
11
Number of repeat modifications

18
16
16
12
7
9
11
8
6
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
24
New modified auditors opinions and conclusions

We issued ten modified auditors opinions and conclusions on assurance engagements in 201415, including two new modifications.
Agency
Reason for modification
Qualified opinions and conclusions

Delta Electricity
The corporation used the income approach to measure the fair value of power stations,
without reference to observable inputs from the outcomes from the sale process. The use
of the income approach was not appropriate. Consequently it was not possible to form an
opinion on the carrying value of power stations, the net revaluation increment or assess the
impact on the profit/(loss) or total comprehensive income.
Delta Electricity AFSL
The qualified opinion issued on the corporations statutory financial statements (detailed
above), also impacted the corporations Australian Financial Services Licensee Assurance
Report, which includes an opinion on the corporations statutory financial statements.
Modified opinions cleared

We work closely with agencies to resolve qualification issues. This year we resolved six previous qualifications.
Ministerial Holding Corporation
The previous qualification arose due to insufficient audit evidence to form an opinion over
the completeness of the opening balances presented as comparative information and land
asset disclosures in the financial statements. The modification was removed as a review of
past legislation and government gazettes did not identify any unaccounted for interests or
obligations. An expert valuation of land and building assets was obtained by the agency to
support land asset values and disclosures.
UWS Early Learning Limited
The previous qualification arose as it was not possible to form an opinion on whether the
company had recorded all fundraising revenue and voluntary donations. The modification was
removed because the company did not conduct any fundraising activities in 2014.
University of Western Sydney Foundation

Trust
The previous qualification arose as it was not possible to form an opinion on whether the trust
had recorded all fundraising revenue and voluntary donations. The modification was removed
because the trust did not conduct any fundraising activities in 2014.
Anzac Health and Medical Research

Foundation Trust Fund
The previous qualification arose as it was not possible to form an opinion on whether the
trust fund had recorded all fundraising revenue and voluntary donations. The modification
was removed because the trust fund demonstrated it had effective internal controls over the
completeness of its fundraising activities.
Murray Catchment Management Authority
The previous qualification related to insufficient appropriate audit evidence to support the value
of seed inventories. The modification was removed because the authority provided evidence
supporting the value of its inventories.
State Emergency Service
The previous qualification related to insufficient appropriate audit evidence to form an opinion on
the existence and value of inventory held at the State Emergency Services (SES) 229 units. The
modification was removed because the SES demonstrated it had implemented effective internal
control over the existence, recording, and measurement of inventory.
25
Our financial audits (continued)
Remaining modified opinions

Eight modifications remain unresolved. However, two of these relate to instances where agencies find it impractical to maintain an
effective system of internal controls over fundraising revenue and voluntary donations until the initial entry of monies is received into
their financial records systems. In these instances, a limitation of scope remains as we are unable to confirm the completeness of such
revenue.
Agency
NSW Ministry of Health
The NSW Ministry of Health did not refund three accommodation bonds within the statutory
timeframe and did not pay the correct amount of interest for accommodation bonds refunded
during the year.
Report on compliance with the prudential

requirements of Division 57 of the Aged
Care Act 1997 and Division 3 of Part 4 of
the User Rights Principles 1997
New South Wales Self Insurance
Corporation
In accounting for its general insurance contracts, the corporation applied an incorrect
accounting standard, resulting in material understatement of its liabilities and failure to disclose
some required information about these insurance contracts.
Sport Knowledge Australia Pty Limited
Sufficient and/or appropriate evidence to support material transactions, pervasive to the

companys operations was not available. Alternative records were not adequate for the purpose
of applying necessary audit procedures.
The Legislature
Seven members claims were not submitted to The Legislature for payment within 60 days
of receipt or occurrence of the expense. Eight members did not return their unsubstantiated
Sydney Allowance amounts to The Legislature by 30 September 2014. Twenty-two members
did not complete an annual declaration stating the benefits accrued by way of loyalty/incentive
schemes were used for parliamentary duties and not for private purposes. One member was
unable to demonstrate their monthly Foxtel subscription claim was for parliamentary purposes.
Review of compliance with the annual

Determination of the Parliamentary
Remuneration Tribunal
The Sydney Childrens Hospitals Network
(Randwick and Westmead) (incorporating
the Royal Alexandra Hospital for Children)
Review of compliance with specified
requirements of the Health Insurance Act
1973, and the Health Insurance (approval of
Billing Agents) Guidelines (No.1) 2004
University of Sydney
Basic Financial Statements audit prepared
in accordance with US GAAP
Trust monies were not paid directly into compartmentalised accounts in a timely manner.
Patients statement accounts did not set out the amount payable by the patient for each
service.
United States Generally Accepted Accounting Principles (US GAAP) require plant, property and
equipment to be measured at historical cost. The university accounted for certain property, plant
and equipment at fair value because historical cost information was unavailable and could not
practically be obtained.
Modifications relating to fundraising and voluntary donations revenue

Agency
Charles Sturt University Foundation Trust
The trust finds it impractical to maintain an effective system of internal control over fundraising
revenue and voluntary donations until the initial entry of the receipt of this revenue and donations
into their financial records system.
State Emergency Service
The State Emergency Service finds it impractical to maintain an effective system of internal
control over fundraising revenue and voluntary donations until the initial entry of the receipt of
this revenue and donations into their financial records system.
26
Our performance audits

Addressing issues of public concern
What is a performance audit?
Choosing a topic
Performance audits are in-depth

assessments of whether government
agencies are achieving value for money.
We choose topics that reflect the interests

of parliament in holding the government
to account. When selecting and scoping
topics, we combine our own research
with suggestions from parliamentarians,
agency CEOs and members of the public.
A performance audit may cover:

}}
the
}}
one
}}
an
whole of an agencys operations

particular agencys activity
activity across a number of agencies.
We report the results of these audits to

the CEO of each agency, the responsible
minister, the Treasurer and parliament.
In 201314, we undertook a major

exercise to establish a three-year program
taking into account the government's
priorities, as outlined in the State Plan
NSW 2021, and its five priority outcome
areas:
}}
rebuild
}}
return
the economy
quality services
}}
renovate
Are recommendations
followed up?
Twelve months after a performance
audit is tabled, parliaments Public
Accounts Committee (PAC) examines
whether agencies have implemented
recommendations from performance
audits and whether any changes in
practice or performance have occurred in
response to these audits.
In some cases, the PAC will hold a
hearing and invite the agency and the
Auditor-General to attend and answer
questions. More information on our work
with the Public Accounts Committee is on
page18.
infrastructure
}}
strengthen
our local environment and

communities
}}
restore
accountability to government.
In 201415, we progressed and

developed this program, to extend it for
another year and ensure a continual threeyear projection (see pages 17 and 34).
The program covered the activities of the
nine departmental clusters responsible for
delivering the governments priorities.
When examining agency performance,
we also refer to some broad themes
that are relevant to todays government
administration and reform: governance,
devolution, partnerships, outsourcing,
efficient service delivery, transparency and
commissioning. The themes on which
we focus depend on the activity being
examined and are finalised during the
planning stage for each audit.
The program is published on our website
and is reviewed annually to ensure it
continues to address significant issues
of interest to parliament, aligns with
government priorities, and reflects
contemporary thinking on public sector
management.
To view our three-year program visit
www.audit.nsw.gov.au/audit-program/
performance-audit-program.
27
Our performance audits (continued)

Agencies audited
Performance audit report
Tabled in parliament
}}
NSW
Managing Contaminated Sites
10 July 2014
The Learning Management and Business

Reform Program
17 December 2014
Westconnex: Assurance to the

Government
18 December 2014
Security of Critical IT Infrastructure
21 January 2015
Vocational Education and Training Reform
29 January 2015
Managing Length of Stay and Unplanned

Readmissions in NSW Public Hospitals
23 April 2015
Country Towns Water Supply and

Sewerage Program
4 May 2015
Large Construction Projects: Independent

Assurance
7 May 2015
Government Advertising
22 June 2015
Implementing Performance Audit

Recommendations
24 June 2015
Efficiency and Effectiveness in Tax

Collection
25 June 2015
Environment Protection Authority
}}
Department
of Trade and Investment, Regional Infrastructure

and Services
}}
Department
}}
Roads
of Education and Communities
and Maritime Services
}}
WestConnex
Delivery Authority
}}
Infrastructure
NSW
}}
Transport
}}
NSW
for NSW
Treasury
}}
Department
}}
Transport
}}
Roads
for NSW
}}
Sydney
Water Corporation
}}
Department
}}
NSW
of Premier and Cabinet
Health
}}
Department

and Services NSW Office of Water
}}
NSW
Treasury
}}
Infrastructure
}}
Transport
}}
NSW
NSW
for NSW
Health
}}
Roads
}}
Sydney
Trains
}}
Venues
NSW
}}
Department
of Primary Industries
}}
Department
}}
Destination
}}
Sydney
NSW
Opera House
}}
Department

and Services
}}
Department
}}
NSW
Treasury
}}
NSW
Ministry of Health
}}
Department
}}
Transport
for NSW
}}
NSW
Police Force
}}
Office
of Finance and Services
}}
Office
of State Revenue
28
This years performance audits

We found NSW Government agencies
with large landholdings need to better
manage their contaminated sites.
Procedures for managing contaminated
sites vary widely some agencies have
developed comprehensive procedures
while others:
}}
provide
little or no guidance to staff

on obligations to notify the NSW
Environmental Protection Authority
(EPA) of significantly contaminated sites
}}
do
not cover how to deal with

contamination issues when leasing,
buying or selling land
}}
only
covered hazardous building

materials, such as asbestos, but not all
contamination.
The largest public landholder, the

Department of Trade and Investment,
(DTIRIS), has made recent efforts to

identify and manage the risk of potentially
contaminated sites on Crown lands. It is
developing a program to assess high-risk
sites, and commenced remediation work
on a number of these. It is yet to develop
a long-term strategy for other sites or
recognise a liability for contamination in its
financial report.
The audit also found long delays in
assessing the extent of contamination
when sites are reported to the EPA.
The EPA lacks management controls to
ensure all significantly contaminated sites
are actively monitored and remediation
milestones are met.
The EPA should recover costs for the
preparation, monitoring and compliance
action required from owners or polluters,
as legislation allows this.
Response
DTIRIS accepted all three key

recommendations. One of these was
qualified, as it stated the impact of
contamination can only be accounted for
after being identified, assessed, measured
and associated costs of remediation
estimated on a case-by-case basis.
The EPA was broadly supportive of the
recommendations, stating that they reflect
activities in place or underway as part of
an ongoing process to improve or adapt
its contaminated land program.
Report release date:

10 July 2014
The Learning Management and Business Reform Program

The Learning Management and Business
Reform (LMBR) program was established
in 2006 to improve service delivery to
schools, corporate staff and TAFE NSW.
This audit assessed the Department of
Education and Communities progress in
implementing the program, and whether it
will achieve expected benefits.
Some parts of the three major
components of the program have
been delivered. However, complete
implementation is behind schedule and
over budget, and the department has
yet to demonstrate that it will achieve
expected benefits.
changes in business requirements and

scope, high level of uncertainty in business
cases, weaknesses in governance
and insufficient program and contract
management. It also underestimated the
support schools needed to successfully
implement it.
The program was expected to be
completed by December 2014 at a total
cost of $483 million.
Response
All eight recommendations were

accepted.

17 December 2014
The department expects it will have spent

a total of $573 million on the program
by 30 June 2015, and needs to allocate
significant additional funding from its
budget to implement the program.
The audit found that the major causes of

the cost increases and delays have been
29
This years performance audits (continued)

WestConnex: Assurance to the Government
This audit found shortcomings in the
governance of the WestConnex projects
early stages.
The processes that provided assurance
to government did not meet best
practice standards. Some good practice
arrangements were adopted, but the
government would have received greater
assurance about the projects risks,
costs and benefits if its Major Projects
Assurance Framework had been
implemented.
Reliance was placed on steering
committees and boards, with responsibility
for project delivery, to also provide
independent assurance to the government
a fundamental conflict.
Only one independent Gateway review
was conducted up to the pre-tender
stage for the M4 road widening. It found

the preliminary business case fell short
of the required standard. If the Major
Projects Assurance Framework was fully
implemented, there would have been four
more Gateway reviews. If all Gateway
reviews had occurred, several deficiencies
in the business case should have been
identified.
Response
The agencies accepted five

recommendations, and a sixth
recommendation in principle.

18 December 2014
The post-business case governance

arrangements did not clearly separate
board-level responsibilities for
commissioning from delivery, or provide
mechanisms to effectively manage the
conflict between these roles.
The audit made six recommendations on
how to better govern the remainder of the
project.

This audit examined whether the systems
used to operate and manage critical
infrastructure in the Sydney metropolitan
water supply system and the NSW traffic
signal network are secure and, if systems
go down, whether there are sound
recovery arrangements in place.
It found Roads and Maritime Services
(RMS) and Transport for NSW had
deployed many controls to protect traffic
management systems, but these would
have been only partially effective in
detecting and preventing incidents and
unlikely to support a timely response.
There was potential for unauthorised
access to sensitive information and
systems that could disrupt traffic.
RMS designed and tested an emergency

response capability for the Traffic
Management Centre for some disaster
scenarios, and recently identified and
initiated improvements for responding to
IT-related disasters.
Sydney Water Corporation was wellequipped to deal with the impact of
security incidents. It had developed and
tested procedures for security incidents
and major outages and provided relevant
training to staff. It had backup for an
operations centre, power supplies and
systems for key facilities.
While Sydney Water Corporations
response capability was good, it was
limited by its inability to detect all security
breaches. For example, control level
access was possible from selected low
security workstations on the corporate
network.
Response
Due to the sensitive nature of the systems

audited, detailed recommendations
were issued to agencies in the form of
management letters. Transport for NSW
and RMS stated they are committed
to enacting the improvements that are
detailed in its management responses for
each item within the management letter.
Sydney Water Corporation supported
almost all of the recommendations.

21 January 2015
30

This audit assessed the effectiveness
of the Department of Education and
Communities framework for Vocational
Education and Training (VET) reform and
whether it has the potential to achieve the
governments objectives.
The audit concluded that the departments
framework for VET reform has the
potential to effectively achieve the
governments immediate objectives to
introduce a VET entitlement without
spending more, while maintaining the
viability of TAFE NSW. However, the
government is more likely to maximise
public value from its investment in VET
if it takes a more balanced approach,
by putting more emphasis on increased
contestability and student choice.
The department is on track to meet its

obligations under the Commonwealths
National Partnership Agreement on Skills
Reform to increase the number of people
completing post-school qualifications.
However, the VET reform framework
does not address the longer-term State
Plan NSW 2021 goal for a 50 per cent
increase in the proportion of working-aged
people with post-school qualifications
at Certificate III level and above. The
audit found the VET reforms budget
neutral objective, its pricing structure and
incentives for efficiency are unlikely to
generate the funds needed to meet this
goal.
Response
All eight recommendations were accepted.

29 January 2015
Managing Length of Stay and Unplanned Readmissions in NSW Public Hospitals

This audit looked at how well NSW
Ministry of Health manages length of stay
and unplanned readmissions in NSW
public hospitals.
NSW Ministry of Health has achieved
considerable success over recent years
in reducing average length of stay
despite increasing pressure on hospital
admissions by older and chronically ill
patients. This success has been driven
by changes in the way health services
are delivered, such as the increasing use
of same day care for treatments that
previously required overnight hospital
stays.
Available data suggests the rate of

unplanned readmissions has not reduced
in New South Wales despite various
strategies and initiatives. The impact of
some of these initiatives on length of stay
and unplanned readmissions is not well
understood and quantified.
Response
NSW Ministry of Health is undertaking

research to better understand unplanned
readmissions, their causes and the best
ways to address them.

23 April 2015
NSW Ministry of Health accepted

four recommendations in full, and
partially accepted the remaining two
recommendations.
There is a good level of length of stay

information available, which is actively
used to manage the time patients spend
in hospital.
31
This years performance audits (continued)

Country Towns Water Supply and Sewerage Program
This audit assessed the effectiveness
of the $1.2 billion Country Towns Water
Supply and Sewerage Program, which
aims to help local water utilities provide
appropriate, affordable, cost-effective and
well-managed water supply and sewerage
services in the urban areas of country New
South Wales.
This audit found the program had
effectively supported local authorities by:
}}
developing
a best practice management
framework
}}
providing
tools, guidance and support

to help utilities adopt better practices
}}
monitoring
utilities implementation of
better practices and their performance.
The financial assistance to utilities had

helped reduce the water supply and
sewerage infrastructure backlog in NSW
country towns, but would not achieve
the programs objective of eliminating the
backlog.
Funding under the program was not wellmanaged prior to 2004. Following a major
review in 2003, funding management
improved but shortcomings remain.
Information management, monitoring and
reporting were poor. Priorities established
in 2004 had not been revisited.
Procedures were not well documented
and funding conditions were not always
enforced.
Response
The NSW Office of Water accepted all ten

recommendations.
4 May 2015
Utilities service levels, efficiency,

compliance with health and environmental
standards and cost recovery have all
improved over the last 20 years.
Large Construction Projects: Independent Assurance

This audit found that the independent
assurance given to the NSW Government
and sponsor agencies on the viability of
large capital projects was inadequate.
Government policy was regularly not
followed and not properly communicated
to those responsible for implementing it.
This audit sought to test the effectiveness
of the capital project assurance system
which includes Gateway reviews
and reporting but significant levels
of noncompliance in our case studies
prevented this. It found low compliance
when mandatory Gateway review
requirements went beyond the case
studies. Only 30 per cent of strategic
reviews and 66 per cent of final business
case reviews had been conducted on

new construction projects in the 201415
Budget.
NSW Treasury had not formally
communicated the governments
decisions on responsibilities and
independent assurance following the
establishment of Infrastructure NSW in
2012, which may have contributed to
noncompliance.
Response
The Department of Premier and Cabinet

accepted three recommendations,
indicated two would be further
investigated and advised the new process
would address the sixth.
7 May 2015
In December 2014, the government

endorsed an improved process for
independent assurance over major
capital projects. The new process has the
potential to address current weaknesses,
but must be properly communicated and
implemented.
This audit focused on the Department of
Premier and Cabinets role in monitoring
government agencies compliance with
government advertising requirements,
by examining advertising campaigns run
by Destination NSW and Sydney Opera
House.
House complied with all government

advertising requirements.
The Government Advertising Act 2011

prohibits government advertising being
used for political purposes. The audit did
not find any breaches of this prohibition
in these campaigns. However, neither
Destination NSW nor Sydney Opera
There is no established government policy

to ensure the increasing use of digital
and social media or sponsorship and
partnership arrangements is appropriately
managed.
The Department of Premier and Cabinet

does not have a monitoring program to
systematically follow up agencies who
are not complying with government
advertising requirements.
Response
Twenty-five recommendations were made

to four agencies, and:
}}
19
recommendations were accepted,

plus three accepted in principle
}}
2
recommendations noted
}}
1
recommendation not accepted.

22 June 2015
32
Implementing Performance Audit Recommendations

This audit assessed agency processes
for implementing performance audit
recommendations. We used key elements
of the Audit Offices Better Practice
Checklist for Monitoring and Reporting on
Performance Audit Recommendations to
assess agencies performance. We also
sought to identify good practice within
agencies.
The audit found most NSW Government
agencies have sound processes for
implementing performance audit
recommendations in the Auditor-Generals
Reports to Parliament. There are many
cases of good practice, for example,
some agencies formed a steering
committee and developed a detailed
plan to implement recommendations.
Another incorporated the implementation
of recommendations into both its

business plan and the work plans of
individual officers who were managing
projects. Most agencies also used their
Audit and Risk Committees to monitor
recommendations.
Some agencies could improve how
they coordinate actions to address
recommendations. Most agencies were
not revisiting these actions to determine
whether they remain appropriate.
Response
The agencies we audited supported the

reports findings.

24 June 2015
The report recommended agencies

use the Audit Offices Better Practice
Checklist for Monitoring and Reporting on
Performance Audit Recommendations.
Efficiency and Effectiveness in Tax Collection

This performance audit examined whether
the Office of State Revenue (OSR) was
effective in collecting as much tax as it
should, and at the lowest cost to the
government.
The audit found evidence that the OSR
does good work. Client satisfaction rates
compare well to tax collection bodies
in other States, and the cost to collect
every $100 of tax has fallen over the past
15years.
However, the OSR can enhance its
performance measurement framework
to better show its effectiveness and
efficiency. Without this work, it is difficult to
be certain how it is performing.
The OSR has had success with

compliance programs that have identified
unpaid tax. In some instances, for every
additional $1.00 spent on activities such
as audits, the OSR has collected an extra
$10 in unpaid tax.
It is difficult to say how much more, if any,
unpaid tax could still be collected. This
report recommended the OSR research
how to better measure how much unpaid
State tax is due to the NSW Government.
Response
Three recommendations were accepted in

full, and two partially accepted.

25 June 2015
This report also recommended that the

OSR build a stronger evidence base to
understand how much additional revenue
could be collected for every additional
$1.00 spent on tax collection activities.
OSR also needs better public reporting of
its performance.
33
The year ahead for performance audit

Continuing with our three-year program
We refer to the State Plan NSW 2021

The audit topics within the 201516 program have been developed taking into account the government's priorities, as outlined
in the State Plan NSW 2021 and its five priority outcome areas:

rebuild

return
the economy
quality services

renovate
infrastructure

strengthen

restore
our local environment and communities
accountability to government.
It is worth noting that the State Plan NSW 2021 is currently under review and when reissued we will re-examine our forward program.
When examining agency performance I will refer to some broad themes that are relevant to todays government administration
and reform: governance, devolution, partnerships, outsourcing, efficient service delivery and transparency.
A T Whitfield PSM
Proposed topics for 201415
Agency cluster
State Plan NSW 2021 Rebuild the economy

Effectiveness of government initiatives to reduce red tape
NSW Treasury / Premier and Cabinet /

Finances, Services and Innovation
Government assistance to industry
Industry, Skills and Regional Development
State Plan NSW 2021 Return quality services

Contracting for Sydney metropolitan bus services
Transport
Sydney Harbour ferries franchise
Transport
Out-of-home care
Communities
Mental health services community care following acute psychiatric episodes
Health
Realising the benefits of Service NSW
Premier and Cabinet / NSW Treasury /

Transport / Finance, Services and Innovation
Community housing
Communities
Performance frameworks in custodial corrections
Justice
State Plan NSW 2021 Renovate infrastructure

South East Sydney Light Rail project
Transport
Managing major urban redevelopment projects Barangaroo
Premier and Cabinet
Albert 'Tibby' Cotter Walkway
Transport
State Plan NSW 2021 Strengthen our local environment and communities
Early childhood education
Education
Food regulation
Industry, Skills and Regional Development
Planning Assessment Commission determinations
Planning and Environment
State Plan NSW 2021 Restore accountability to government

Government advertising
Premier and Cabinet
Introduction of activity based funding for hospital services data quality
Health
For further information on these audits, and for our three-year performance audit program, see
www.audit.nsw.gov.au/audit-program/performance-audit-program.
34
People
Our people are highly skilled and dedicated
to improving the public sector
At the Audit Office of New South Wales, we are
building a working environment that:

is
constructive and achievement oriented

is
founded on respect for staff, clients and

stakeholders

strives
to maintain a balance between work life and

personal life

attracts
Kamol Sharma Auditor / Analyn Vasquez Senior Auditor

Client location Sydney Cricket and Sports Ground Trust
and retains highly skilled staff who take

opportunities to achieve their potential
Staff satisfaction
Our staff indicated a number of areas for improvement
Staff satisfaction dropped to 67% from 73%

Performance dropped on all key staff opinion survey measures
Staff satisfaction down
The staff opinion survey is an important
measure of staff satisfaction. It calculates
a weighted satisfaction index for working
at the Audit Office, and an overall 'gut feel'
measure of staff satisfaction.
Results for the year showed a decline
compared to 201314, with our staff
satisfaction index dropping to 67 per cent
from 73 per cent. The gut feel satisfaction
measure also fell, with 68 per cent of
respondents satisfied to extremely
satisfied working at the Audit Office, down
from 81 per cent.
Staff sustainability, which effectively
measures work-life balance, continues to
decline. Thirty-seven per cent of our staff
considered themselves to be working
in a highly sustainable way, down from
42percent in 201314. The percentage of
staff working in a moderately sustainable
way fell from 40 per cent to 35 per cent.
Staff engagement down

Staff engagement correlates measures
of staff satisfaction, morale, loyalty and
commitment to the Audit Offices success,
and whether they feel trusted and valued.
Staff engagement fell from 74 per cent
to 68 per cent. Seventy-two per cent of
staff would recommend the Audit Office
as a great place to work, down from
82percent. Eighty-three per cent of staff
are willing to put in extra effort to achieve a
professional result, down from 89 per cent
in 201314.
Morale continued to trend down, with the
201415 score of 52 per cent reporting
reasonable to very high morale dropping
from 64 per cent in 201314.
Staff satisfaction %
76
77
78
During 201415, our People strategic

focus area delivered Project Blue (see
page 10). A significant part of the project
dealt with proposed changes to working
conditions and remuneration, which led
to a period of change and uncertainty.
Staff did not vote to adopt the proposed
enterprise agreement, however, we
remain committed to implementing Project
Blue (see page 10) through our 'People'
strategic focus area, and to create a
modern, competitive, cost effective and
flexible workplace, which will positively
impact the morale, engagement and
satisfaction of our staff.
}}the Office Executive communicate a

clear direction for the Audit Office
}}the Audit Office has sufficient resources
to deliver value to clients
}}the Leadership Team consistently
demonstrates constructive behaviours.
During the year our Constructive
Leadership focus area worked together
with Project Blue to improve constructive
leadership styles, focusing mainly on our
Leadership Team (see page 49).
The year ahead
Performance gaps
The staff opinion survey tells us what staff
consider most important, and the gaps
between their expectation of the ideal
and how well we are currently performing.
The top five issues for our staff remained
unchanged from 2014:
}}I am able to balance work with my
personal life
}}I have the information I need to do my
job well
}}I feel valued
}}I feel trusted
}}I feel like I am part of a team.
Gaps of more than 20 points between
importance and delivery indicate a
need to focus on these areas. In the
201415 survey, 19 of the 20 performance
indicators had a performance gap above
20 points. Of these, five had gaps above
40 points:
}}we have a constructive culture at the
Audit Office
87
80
80
In 201516, we will continue to address

the issues raised in our staff opinion survey.
Through our Constructive Leadership
strategic focus area we will develop a
framework and guidance for giving and
receiving constructive feedback
(see page 10).
The performance agreements that every
staff member will sign will embed shared
expectations and positively impact our
staff's concerns.
Through our Operational Excellence
strategic focus area, the Retain project (see
page 10) will improve sustainability and
morale issues.
Significant performance gaps

Good communications exists throughout the
Staff morale %
73
}}good communication exists throughout

the office
office
82
80
The Office Executive communicate a clear

direction for the Audit Office
45 44
67
38
64
31
52
26
2016 TARGET
2015
2014
2013
2012
2011
2016 TARGET
2015
2014
2013
2012
20
2011
35
30
2011
17
2012
18
2013
2014
2015
36
Performance
A focus on effective, quality results
67% productivity achieved, up from 62% last year
Productivity
The vision of the Audit Office is Making
a difference through audit excellence, so
the result of our work needs to make a
difference to the States performance.
Professional standards and expectations
grow continually, and our staff productivity
(the percentage of total staffing hours that
we charge to our audit work) remains fairly
close to our 65percent target, and in
201415 increased from 62 per cent to 67
per cent.
Total staffing hours include time worked
by all staff, including those responsible for
administration and governance.
During 201415, we successfully
implemented some major technology and
infrastructure strategic initiatives which
have resulted in greater efficiencies.
Improving our performance

management framework
In 201415, we consulted widely with
staff and integrated the NSW Public
Service Commissions Capability
Framework (see page 42) into policies and
processes covering recruitment, selection,
performance and development (see page
42). Our new Performance Management
Policy strengthens the alignment between
individual performance agreements and
Audit Office goals.
The number of positions subject to
contract was extended, and senior staff
signed new, modernised contracts which
focus not only on operational outcomes,
but on demonstrating constructive
behaviours.
Productivity %
2015
2014
61
62
65
2016 TARGET
67
2013
64
2012
2011
65
All staff were trained in setting outcomes

aligned to our vision, mission and strategic
focus areas. To support improvements
in managing performance, we began
implementation of MiCareer (see page 10).
Enhancing technology
infrastructure and systems
We continued with our technology
strategy of enhancing audit delivery
through improved systems and a
continued focus on being mobile by:
}}launching the Elite practice
management system (see page 10)
}}piloting a resource scheduling platform,
Retain, to simplify the management and
allocation of our people resources
(see page 10)
}}updating all mobile devices, with
improved security and management
capabilities
}}developing the the MiCareer human
capital management system
(see page10)
}}enabling a cloud-based single sign-on
platform to support access to core
services in the cloud
}}delivering a cloud-based file-share
facility to enable simple, secure transfer
of information.
We also continued to meet various
compliance requirements and maintained
operational stability by:
}}implementing systems and processes
to comply with the NSW data
classification policy
}}successful transitioning from
ISO27001:2005 security standard
to ISO27001:2013, to maintain our
ISO27001 certification
}}developing a Records and Information
Strategy with a more comprehensive
approach to managing information
across the entire organisation
}}upgrading storage systems to support
additional information growth and
improve resilience of key information
technology systems.
Fair and responsible remuneration

In 201415, we looked closely at our
remuneration framework and conditions
of employment. We asked an external
provider to review the size of the roles
required for effective service delivery. The
review also compared our remuneration
to the marketplace and confirmed only a
small number of inconsistencies. We will
use this information to inform our future
remuneration decisions.
We also established a new Remuneration
Committee (see page 54), chaired by
Dianne Hill, an independent member
of our Audit and Risk Committee. This,
together with new policies which focus
on improved consultation around the
remuneration process and a more clearly
articulated grievance process for staff
who disagree with their assessment,
significantly improved governance of the
remuneration process.
We further simplified our annual staff
remuneration review. Our Leadership Team
collaborated to ensure the assessment
criteria was consistently applied, there
was greater equity and transparency and
a shared view of what we expect of staff.
We will continue to ensure our approach
to remuneration is procedurally fair and
fiscally responsible.
We continue to work within the NSW
Government's labour expense cap and
wages policy.
The year ahead

In 201516, we will embed improvements
to our performance conversations and twoway feedback. Performance agreements
will be fully aligned to our strategic focus
areas.
MiCareer, which will underpin the
performance agreement process, will be
extended as the year progresses, with
modules integrating learning management,
social interaction, recruitment and
remuneration processes. Communication,
consultation and training will be delivered in
support of these enhancements.
(See page 10 for further details of MiCareer
and our strategic focus areas.)
37
Staffing and recruitment

Focus on attracting high quality staff
249 full-time equivalent staff

54% of middle management are women
Staff turnover high but our brand
remains strong
Our employee value proposition,
strong brand, excellent reputation and
opportunities for personal and career
development has enabled the Audit Office
to continuously attract high quality staff.
This has positively impacted our ability to
sustain a regular supply of specialist talent
and our capacity to meet client demands.
In 201415, this need to attract and
retain high quality staff was strongly
reinforced to us with staff turnover
increasing significantly, from 12 per cent
to 24 percent. Key reasons for leaving,
gathered from staff in exit surveys,
included:
}}staff wanted a career change, although
the majority of staff indicated they
wanted to stay within the public sector
}}staff felt promotional opportunities were
limited
}}staff indicated they felt challenged and
enjoyed work but would have liked
additional resourcing
}}staff would have liked more
communication and change
management around the strategic
initiatives in our 'People' strategic
focus area (see page 49) over the last
12months.
Total staff*
While this is concerning, many of our

staff who left the Audit Office moved to
more senior roles in NSW and Federal
Government agencies, and the exit
surveys also showed staff think the Audit
Office has a hard-working culture and
makes a real difference within the public
sector. We see this as a positive reflection
of the reputation our staff have established
for professional excellence.
The number of full-time staff has remained
broadly the same at 249, up from 248 in
201314.
We continued to improve our graduate
recruitment by contributing to university
campus events and publications. We
worked to ensure our ongoing alliance
with professional accounting bodies by
attending career events.
In 201415, we conducted two graduate
intakes. We offered a four-year fixed-term
contract to 17 applicants from the 533
applications received. During the second
round we received 288 applications and
selected three successful applicants,
bringing the total for 201415 to 20, an
increase of eight places from the previous
year.
Staff turnover %
249
11
11
12
12
2016 TARGET
248
2014
259
2015
2013
2012
2011
2015
2014
2013
2012
2011
Leadership Audit Corporate
We recognise our remuneration

framework, which is embedded in our
Award, needs to be more flexible and
achievement oriented to better support
our business needs. A more modern
industrial instrument in time, together with
our revised policies, will ensure we can
continue to attract and retain the talent we
need to fulfil our mandate now and into
the future.
We are committed to a diverse workplace

that reflects the constantly changing
external workforce and client base. We
further expect it is free from all forms of
unlawful discrimination, and require all
staff to adhere to Audit Office values and
related policies and procedures which are
reviewed annually.
24
271
In 201415, we aimed to improve staff

relations by developing a new enterprise
agreement between our staff and the
Audit Office. This differs from the current
arrangement where staff are paid under
an Award negotiated directly with the
Public Service Association of NSW. We
consulted extensively with staff, allowing
many opportunities for open discussion.
Voting participation rates were very high at
91percent of eligible staff, indicating staff
were highly engaged in the consultation
and assessment process. Unfortunately,
a sufficient number of staff did not vote in
favour of the agreement. As a result, we
will focus on improving the existing Award
over the coming year.
Equity and diversity
*FTE: Full-time equivalent.
259
Working to improve staff relations
People are appointed to positions based

on merit. To further reinforce this, as part
of our 'People' strategic focus area, and
after conducting a consultation process
with our staff, we reviewed and revised our
Recruitment and Selection Policy during
the year to ensure this was the case (see
pages 10 and 42).
The number of women as a percentage of
the total workforce remained constant at
51 per cent. The representation of women
in middle management was 54 per cent,
consistent with last years 55percent,
demonstrating our commitment to
38
promoting women through all layers

of the Audit Office. The percentage of
women in executive and senior leadership
positions has increased from 34 per
cent to 45percent. We anticipate these
figures will continue to rise over the
next few years with our strong ongoing
commitment to supporting the growth and
development of talented women in the
organisation.
In 201415, we developed a Multicultural
Events Calendar and cultural committees.
We celebrated four cultural festivals in the
workplace Diwali, Eid-ul-Adh, Lunar New
Year and Harmony Day. Staff at the Audit
Office come from 39 countries and speak
over 26 languages, and these celebrations
help us recognise the diversity of our
workplace and encourage our staff to
learn about other cultures.
Improving the representation of Aboriginal
people and Torres Strait Islanders in the
Audit Office is important to our ongoing
commitment to equity and diversity. We
are an equal opportunity employer, and
will continue to ensure this is our focus in
the coming year.
For more information on equal
employment opportunity groups and their
distribution, see Appendix Six.
Women in middle management %

54
2016 TARGET
2015
50
2014
53
2013
51
2012
2011
51
55
Supporting our staff

We continue our strong commitment
to health and well-being practices. In
201415, we continued to improve our
Work Health and Safety Framework
and systems (see 'Workplace and
environment' on page 41). Many of our
staff have continued to benefit from our
Employee Assistance Program, which
includes an independent, confidential
counselling service for staff and their
immediate families.
We continue to provide assorted fruit
every day to promote healthier eating and
make available a variety of non-caffeinated
drink options in our break out area. We
also provided free flu vaccinations to all
staff.
We continued to provide support to those
competing in the Corporate Cup running
competition and encouraged work-life
balance and exercise. In 201415, we
maintained our corporate partnership
with a local gym, providing low-cost
membership to our staff. Staff also
competed regularly as teams in sporting
events such as the City to Surf and indoor
soccer competitions.
The year ahead

Our strategic focus areas of Constructive
Leadership, People, Product Delivery
and Operational Excellence will play
an important role in helping us to shape
a more constructive and achievement
oriented culture. We expect to see
improvements in a number of areas by:
}}implementing an achievement oriented
performance management framework
}}continuing to improve on the current
Audit Office Award
}}continue to improve the remuneration
framework
}}developing a workforce plan that
ensures we deliver value through the
right skills, resources and structure.
Recreation club
The recreation club, known as the
ReClub, is a social organisation run by
staff, for staff. Approximately 57 per cent
of staff are members of the ReClub,
a drop from last year's 64 per cent.
Reasons for this reduction included
recent turnover and some members not
feeling they were receiving the benefits
of membership. In order to address this
reduction in numbers, in 201415, the
ReClub Committee conducted a survey
as well as a staff consultation process.
The ideas generated from the survey and
consultation process will be implemented
in 201516 and will hopefully lead to an
increase in members.
The club is fully funded by staff and run
by a representative committee. Some
of the events held in the past year were
the Annual Harbour Picnic, the Annual
Dinner, the Christmas Party, Australias
Biggest Morning Tea Annual Bake-Off and
numerous happy hours.
The club also encourages and supports
participation in sporting events, such as
the City to Surf and JP Morgan Chase and
Co Corporate Challenge Run. The club
is an integral part of our culture, with fun
activities and a chance for staff to network
with colleagues they may not usually see
on a daily basis.
39
Professional development
Continuing to invest in our talent
An average of 9 training days per staff member

Well-developed skills
Our ability to fulfil our mandate and add
value to our clients business depends on
the skills and proficiency of our staff.
In 201415, we adopted the '70:20:10'
professional development framework,
which aims to deliver 70 per cent of a staff
members development through on-thejob coaching, 20 per cent from peerbased learning and ten per cent through
formal training. Training days recorded
in 201415 included online learning, onthe-job coaching and attending face-toface sessions.This enabled a reduction
in the budget for 2015 by utilising more
cost effective learning solutions, such
as developing the coaching skills of our
people managers and developing online
modules covering fraud, gifts and benefits
policies and work health and safety. For the
first time our annual accounting standards
update was made available as a webinar
(see page 46).
We continued to assist with professional
accounting qualifications by reimbursing
100 per cent of fees. Seven staff qualified
as chartered accountants in 201415, and
three as certified practising accountants
(CPA).
We continue to support non-audit staff
with their further education by paying
a percentage of their fees. Study leave
is granted for all those completing their
studies.
Technical and leadership

development
Financial Audit continues to integrate
the learning from the 'Big Four' Audit
Methodology implemented in 201314,
including developing managers and staff
Training spending $000
to conduct in-house training using public

sector examples.
Financial Audit and Information Systems
Audit staff were trained further in complex
computer systems utilised within NSW
Government to ensure they have a deep
understanding of their clients processes
and systems, and can provide more
quality information as part of the audit.
Corporate Services had further training
in our practice management system and
other systems implemented in 201415,
and continued to develop their staff
through the business planning process,
enabling every staff member to work
outside their area of expertise.
Performance Audit staff continued to
attend industry conferences, develop their
advanced report writing skills through
face-to-face training and coaching, and
work on better engaging their clients. They
also attended and facilitated parts of the
Australasian Council of Auditors-General
performance audit training.
In 201415, we held another successful
business simulation for newly promoted
and recruited staff and managers at
various levels across the business. We
asked some of our leaders to revisit the
simulation as coaches as part of our
ongoing commitment to developing
coaching skills.
Following the simulation, team members
are provided with one-on-one coaching by
external business coaches, with detailed
debriefing from the program and support
to improve in key development areas.
One-on-one business coaching for our
Leadership Team continued to be a key
part of our leadership programme.
Average training days per staff member
Staff development
Throughout 201415, we continued
to offer our staff a variety of work and
development opportunities. Due to the
number of staff who left us during the
year, others were given the opportunity of
working in more senior positions.
There were many opportunities for staff
to work on strategic initiatives, including
the chance to be involved in the 100 Day
Leaders program (see page 42). Staff also
had the opportunity to participate in public
speaking at whole-of-office events. As part
of business planning at branch level, staff
have the opportunity to facilitate sessions
and lead strategic focus areas.
As part of our commitment to staff
development experiences in other
organisations, we partnered with
PricewaterhouseCoopers to offer eight
Financial Audit staff a three- to sixmonth secondment. We also arranged
secondments for two staff members with
the NSW Parliamentary Budget Office,
and continued to second staff to various
business units within the office.
The year ahead

In 201516, we will continue work in our
strategic focus areas of Constructive
Leadership, People and Product
Delivery to further develop leadership
capability, focus on whole-of-government
knowledge and further leverage
technology. Over the next year we will be
focusing on:
}}implementing an upward feedback
model for people managers
}}implementing the new Learning and
Development Strategy
}}implementing MiCareer (see page 10)
1,020
}}focusing on individual development

around capability gaps
12.5
800
800
800
10.5
758
9.5
758
9.0
9.0
2016 TARGET
2015
2014
2013
2012
2011
2016 TARGET
2015
2014
2013
2012
2011
7.5
}}reporting on learning and development

spend, to be able to more clearly
assess return on investment.
(See page 10 for more information on our
40
Workplace and environment

Keeping our people safe is a high priority
17 reported safety incidents

3 new workers compensation claims
Work health and safety
We are committed to providing the best
possible standard of work health and
safety (WHS) for our staff at the office and
client premises, and for visitors to our
head office.
In 201415, we strengthened our
consultative approach through the Audit
Office WHS Committee, which is focused
on supporting the Audit Office to meet
WHS requirements. The committee is
made up of elected staff and nominated
management representatives, who
work proactively to identify and resolve
concerns. The committee reviews and
actions the results of WHS audits and
inspections, identifies WHS hazards and
risks, and understands the impact of
operational and business requirements on
the safety and wellbeing of our staff.
The committee completed two days of
WHS training in 201415, to consolidate
and update their knowledge. As with
every year, first aid officers completed first
aid and defibrillation refresher training.
We also continued work on updating the
Business Continuity Plan, ensuring all
WHS requirements were included.
During 201415, there was a reduction
in reportable WHS incidents down to 17
from 21. The issues directly related to
safety were immediately reported and
addressed by the WHS Manager and the
committee. The reports were varied, and
main injury categories were slips, trips
and falls, manual handling, environmental
hazards and repetitive strains. Seven of
these resulted in workers' compensation
claims (three slips, trips and falls, and four
repetitive strains), with four resulting in lost
time. We worked closely with these staff to
support their recovery and safe and timely
return to the workplace.
We set a goal to improve safety
awareness and WHS knowledge in
201415, and measured this through our
annual WHS survey. We are pleased to
report a significantly higher proportion of
respondents are aware of WHS basics
(71 per cent, up from 54 per cent in
201314), which includes knowledge
of staff representatives, contact details
and policies. One hundred per cent of

staff completed compulsory online WHS
training, which will now be carried out
annually.
In 201415, we identified client sites
considered high risk and visited premises
in order to develop a comprehensive
checklist to ensure staff safety. We are
trialling this with the view to rolling it out
across all client sites.
Quarterly reports on WHS goals and
targets, as well as WHS Committee
meeting outcomes, are presented to
the Office Executive and Audit and Risk
Committee. In 201415, we further refined
our key WHS measures and performance
indicators by developing new, more
effective, key performance indicators.
Greenhouse performance
maintained
The Audit Office achieved a greenhouse
building rating of four and a half stars, in
line with government targets, by:
}}buying 40 per cent green electricity
}}using timers on lights and equipment
}}buying energy efficient equipment
}}running small, fuel efficient vehicles in
our fleet
}}reducing our fleet car size.
The year ahead

In 201516, we plan to build on last years
progress around WHS by focusing on:
Reducing our environmental

impact
}}reducing the lost time injury frequency

rate
The Audit Office continues to implement

its Waste Reduction and Purchasing
Plan (WRAPP) which guides us towards
meeting environmental targets.
}}rolling out a new WHS Client Safety

Checklist to be completed at all client
sites
We use 50 per cent recycled content

paper in all our photocopiers and printers
and recycle 100 per cent of wasted
paper using secure disposal processes.
We recycle 100 per cent of our ink and
toner cartridges, and continue to recycle
cardboard and other recyclable products.
All laptop batteries are disposed of in an
environmentally-friendly way.
In 201415, we remained focused on
reducing our environmental footprint by:
}}developing and distributing injury

management information packages to
support timely return to work
}}improving reporting against WHS goals
and targets.
We will aim to continue to reduce our
environmental footprint in 201516 by:
}}exploring the possibility of recycling
organic waste
}}researching the benefits of reducing
fluorescent light tubes.
}}publishing all of our Auditor-Generals

Reports to Parliament in online format
only
}}implementing a secure online filetransfer platform, so clients can easily
share large files with us electronically,
rather than via post
}}continuing to convert hard copy forms
to self-service online forms
}}introducing improved recycling sorting
bins to encourage recycling
}}completing our electronic mail
distribution project.
41
Case studies
Developing the leadership capability and creativity of our staff
100 Day Leaders program launched

For the first time in March 2015, we launched a program we call
100 Day Leaders. This is a structured opportunity for senior
staff who are not part of the Leadership Team to participate in
the Audit Office strategic planning process. The 100 Day Leaders
had the opportunity to attend the 201516 strategic planning
session, and to run the Constructive Leadership focus area,
with assistance from Leadership Team mentors. Each 100 Day
Leaders group works for three months before handing over to a
new group. This gives many people an opportunity to participate,
and also allows for a significant amount of time for each group
in the program to achieve some great results. The 100 Day
Leaders are developing a toolkit to guide staff in providing
performance feedback to managers, which will be implemented
in the business. They have been great ambassadors for strategic
planning and taking back key messages to their colleagues. The
100 Day Leaders are also workshopping strategies to assist staff
in leadership roles to become more constructive and confident
leaders.
Reviewing our skill mix for excellence and

transparency
In 201415, we undertook two restructures as part of our
Operational Excellence strategic focus area, which involved our
Performance Audit and administration staff.
Performance Audit restructure
Performance Audit implemented several initiatives to improve the
way the audit program is delivered, including streamlining audit
processes, improving planning and scheduling of audits and
delivering an increased number of audits each year.
Working within the NSW Public Sector Capability

Framework
In 201415, we adopted the NSW Public Sector Capability
Framework. A capability describes the knowledge, skills and
abilities that public sector staff, at every level, must demonstrate
to perform their roles efficiently and effectively. As an independent
agency we are not required to adopt the framework, but we
recognise the value of this best practice approach and the value
in aligning with the greater public sector.
There are 20 capabilities, each with five levels from foundational
to highly advanced. The framework describes the necessary
skills and behaviours for each level.
We also developed occupation-specific capabilities and
descriptions for some Audit Office roles, for example, financial
auditors and analysts in Performance Audit.
These occupation-specific capabilities, along with those
determined by the PSC, provide a comprehensive description of
the knowledge, skills and abilities required for each role. Focus
capabilities are highlighted as those that a staff member would
need to demonstrate on day one of starting their role.
Capabilities and role descriptions
All of our role descriptions have been updated using the PSCs
role description template, ensuring they are all consistent and
relevant, with defined deliverables, not just an exhaustive list of
tasks required for the role. Each individuals role description was
assessed against the capability framework and will be reviewed
each year.
Capabilities and recruitment
Progress was made to meet new audit program requirements,

however, it was determined some fundamental structural issues
needed to be addressed to ensure Performance Audit continues
to make a difference through audit excellence.
We have adopted the PSC recommendation that when recruiting

for a role, at least three assessments should be utilised, which are
based on capabilities listed for that role.
As a result, the structure of Performance Audit was reviewed and

a restructure implemented.
By adopting the NSW Public Sector Capability Framework

we are assisting managers and staff to have a clear, common
understanding of the role expectations, and providing a starting
point for capability assessment and development planning.
The overall benefits of the restructure were to:

}}provide enhanced career opportunities
}}better match skills and capabilities with roles and tasks at all
levels
}}create more opportunities for skill development across all
Performance Audit roles
}}be able to produce more performance audits of greater value
and with more impact
}}better utilise and leverage resources and expertise for
performance audits
}}create a more agile performance audit function better able to
respond quickly to changes in the external environment with
greater skills diversification, multi-tasking and flexible resourcing
cross-branch, pooled and short-term specialists as required.
Capabilities and performance management
Capabilities and learning and development

The NSW Public Sector Capability Framework has given the Audit
Office a common language to assess organisation-wide learning
and development needs, as well as enabling development to
be targeted to build the capabilities needed in a staff members
current and future role.
Capabilities and career planning
Capability levels allow our staff to shape their own learning
and development plans to meet their career goals and take
responsibility for their career development.
42
Profession
We are known for influencing auditing
in Australia
We work closely with the auditing profession,
commenting on draft accounting and auditing
standards, and presenting to various forums
on auditing and governance.
Michael Thistlewaite Senior Manager, Programmes and
Business Analysis
Client location The Mint (Historic Houses Trust)
This helps us maintain our professional presence

and influence the direction of auditing in Australia.
Professional influence
Making positive and varied contributions
30 presentations delivered to the public and the profession

Professional services
Services to the public sector
The Audit Office has an Audit Support

team responsible for technical advice on
professional standards, legislation and
regulations. Audit Support contributes
to high quality public sector financial
reporting by ensuring Financial Audit staff
understand, implement and apply auditing
and accounting standards consistently
and fairly. Audit Support reviews
modifications to clients audit opinions
before they are issued, to ensure they are
fair and in accordance with applicable
standards and helps our financial auditors
maintain their professional knowledge and
keep up-to-date with latest developments.
The Audit Office aims to be recognised

as a leader and expert in the auditing and
accounting profession. We do this via
presentations, submissions, contributions
to external committees, and appearances
before parliamentary committees.
Educating
Our staff have, for many years, been
involved in determining the content of
training modules, leading training and
focus sessions, and marking exam papers
for the Institute of Chartered Accountants
Australia and New Zealand and CPA
Australia (see pages 46 and 102).
Graduates employed by the Audit Office
must gain membership of a professional
accounting body and their professional
qualifications by completing the training
and passing exams for a recognised
Australian professional accounting
qualification.
Mentoring
We provide formal mentoring to all
our candidates for memberships of
professional accounting bodies. This
program has achieved consistently
outstanding results, and produces well
trained, high calibre professionals for our
audit teams.
Advising
The Audit Office interacts with Australian
accounting bodies, participating in
their committees, research groups and
working parties (see page 102). We aim
to help them gain an understanding of
the issues facing the public sector. Our
representatives attend roundtables hosted
by the standard setters. We develop
comments in conjunction with other
Australian audit offices to help the boards
develop standards that can be applied with
equal ease in the public as well as private
sectors.
Submissions made
17
14
16
2013
2012
31
2011
30
2016 TARGET
32
2015
40
15
2015
49
45
2014
Presentations delivered
2011
In 201415, the team continued to play

a role in supporting and maintaining our
financial audit methodology, Iris, which
is based on one used by a Big Four
professional services firm. Iris addresses
the requirements of the professional
standard setters and legislators and
uses world-leading audit software. It
is designed to target risks and deliver
effective, value adding audits. During
201415, Performance Audit also worked
to develop a software-based solution to
document and deliver their audits based
on Iris.
2014
The team produces a monthly publication,

Professional Update, available on our
website. This provides commentary on
emerging issues, the activities of standard
setters, NSW Treasury and other central
agencies, regulators, professional bodies
and the courts.
The Audit Office coordinates the efforts

of all Australian audit offices developing
responses to professional bodies on
pronouncements they have exposed for
comment. We determine which will impact
audit offices, our clients or the public
sector in general. We have prepared
or contributed to five responses by the
Australasian Council of Auditors-General.
2013
They also contribute to the effort of

the Australasian Council of AuditorsGeneral when commenting on new
pronouncements.
Submissions to professional
bodies
2012
Audit Support is seen as a leader in the

profession, particularly in public sector
accounting issues. Their input is regularly
sought by professional bodies and NSW
Treasury on a wide variety of financial
reporting matters.
We delivered 30 presentations to a variety

of audiences in 201415, two less than
in 201314. Fifteen of these were to the
public sector. Presentation topics included
the role of the Audit Office and future of
public-private partnerships, governance in
the public sector, managing fraud control
obligations, issues impacting Australian
universities, the role and functions of
a best practice Chief Financial Officer
(CFO) and where a CFO needs to focus
to maximise impact and value (see pages
100 and 102).
Influencing by educating,
mentoring and advising
44
Influencing through the

Australasian Council of
Auditors-General
The Audit Office is an active participant
in the Australasian Council of AuditorsGeneral (ACAG), established in 1993
to encourage sharing and cooperation
between audit offices in Australasia.
We provide administrative support for the
Executive Director of ACAG. We host and
chair meetings of Auditors-General, as
well as participate in and support various
ACAG sub-groups and working parties,
including:
}}
ACAG
Financial Reporting and Auditing

Committee, which is responsible for,
among other things, developing a
consensus view in relation to financial
auditing, accounting and financial
reporting matters
}}
Heads
of Financial Audit, which shares

information between members and
supports the development of effective
and efficient financial auditing methods
and practices by members, and
oversees financial audit training for
member offices and others
}}
Heads
of Performance Audit
Group, which shares information
between members and supports the
development of effective and efficient
performance auditing methods and
practices by members, and oversees
performance audit training for member
offices and others
}}
Audit
Quality Assurance Panel, which

assists audit offices to meet, as a
minimum, legal and professional
requirements for quality control,
establishes agreed Audit Quality
Indicators, and coordinates various
related surveys
}}
ACAG
Information Systems Audit

Group, a forum for exchange of
knowledge and experience in
information systems audit and the use
of information technology as a support
tool for auditors.
As a new initiative, in 201415, we

took the lead role in organising and
coordinating an online update on
accounting standards for ACAG member
offices, with a view to cost-saving and
establishing a better understanding
of common problems and possible
responses (see page 46).
We contribute to ACAGs position on

various issues, including submissions to
public inquiries on matters of public sector
accountability and to ACAGs position on
local and international accounting and
audit standards.
ACAG Performance Audit Managers
Workshop 2015
This workshop, held in March 2015,
brought together managers from audit
offices in Australia and New Zealand.
We hosted this forum where participants
discussed current practice issues and
emerging challenges of performance
auditing.
ACAG Performance Audit Methodology
Workshop 2014
In October 2014, many of our
Performance Audit staff attended this
workshop, along with analysts from other
audit offices in Australia and New Zealand.
The program defined performance
auditing, discussed relevant auditing
standards and guidance for assurance
engagements, and ACAG performance
audit methodology. It outlined each stage
of an audit from planning a performance
audit to reporting.
Knowledge sharing
The heads of Performance Audit in
all Australian States and Territories
meet twice a year to share ideas on
performance audit topics, methodologies
and better practice. Through these
meetings, and subsequent liaison between
audit teams in the different jurisdictions,
we have helped other offices develop new
audits on topics that have proved useful
to them. These have included efficiency
of operating theatres, chronic disease
management and tendering bus contracts.
In turn, our performance audit program
has benefited from topics successfully
delivered elsewhere. Our audits on
major capital projects and information
technology security were two examples
(see page 28).
The year ahead

In 201516, we will maintain our
professional presence by:
}}
contributing
through ACAG to the

development of new standards by
the Australian Accounting Standards
Board (AASB), as it works through a
substantial program focused on not-forprofit and public sector entities
}}
implementing
a new approach to
enhance audit quality. We will conduct
quality reviews that focus on audits in
progress, as well as completed audits,
providing timely support and feedback
to audit teams in the field
}}
our
Performance Audit team's

representation on the advisory group for
the Auditing and Assurance Standards
Boards (AUASB) review of the Standard
on Assurance Engagements 3500
Performance Engagements
}}
liaising
with NSW Treasury about their

Financial Management Transformation
Program and development of public
sector accounting policy
}}
engaging
with professional bodies

about issues facing the profession
and the development and focus of
educational programs
}}
engaging
with central agencies,

standard setters, regulators and audit
offices in other jurisdictions, on their
focus areas, emerging issues and
requirements
}}
publishing
Professional Update, the

Audit Office's monthly newsletter
highlighting developments likely to
impact the NSW public sector
}}
releasing
newly developed
better practice guides, including
commissioning and the role of the CFO,
and continuing to actively participate
in consultation forums and make
submissions on proposed changes to
professional standards
}}
continuing
to support the development

of audit staff from Papua New Guinea
by hosting two secondees.
45
Case studies
Collaboration adds value
Collaborating with other audit offices to provide shared training
Auditors-General across Australia recognise the potential for
savings and collaboration through the effective online delivery
of training material of national relevance, such as accounting
standards. The national audience for such training is 700 to 800
technical staff.
A pilot project was conducted in May 2015 with participation from
the audit offices of New South Wales, Queensland and Victoria.
Proposals for a learning solution were sought from six external
training providers. The objectives of the training were to:
}}
reduce
the cost of audit offices delivering an annual update on

accounting standards
}}
expose
staff to a range of views and issues from other audit
offices
}}
facilitate
the early identification of issues which lend themselves

to a common approach
}}
expose
professional development staff in each office to the

practicalities of organising and participating in a concurrent
online training exercise.
The three offices worked closely with the chosen training provider
to develop materials relevant to the public sector. The learning
solution was unique and innovative. Live facilitated training
sessions were delivered simultaneously to groups in New South
Wales, Queensland and Victoria, with the facilitation managed
evenly across the three states. Facilitated webinars were available
for staff to access from remote locations. Participants then
completed online testing to determine whether learnings had
been absorbed. Staff unable to participate in the group sessions
or webinars could access a recorded version of the training.
The training met the objectives, despite some technical issues
impacting the experience for some participants, and substantial
cost savings were achieved. The three offices conducted a full
debriefing of the pilot and agreed on enhancements for the
training for 2016. Other audit offices have indicated their interest
in participating and it is likely the collaboration will be extended to
other types of training in the future.
Supporting CPA Australia in setting assessment standards

The Audit Office has a keen interest in supporting accounting
professional bodies. In February 2015, CPA Australia sought
nominations for qualified chartered accountants or certified
practicing accountants (CAs or CPAs) to form a committee of
subject matter experts (SMEs) to set the minimum competence
levels for the CPA Financial Accounting and Reporting module.
This module is one of the six foundation exams which provide
an opportunity for candidates without the traditional accounting
education background to demonstrate the required knowledge for
the CPA Program.
Weini Liao, Director of Financial Audit, was selected to attend
the two-day assessment standard workshop in Melbourne in
March 2015. Weinis expert knowledge in financial accounting and
reporting, and experience in working with undergraduates from
her previous lectureship at a number of universities, meant that
she was a good candidate to become a SME.
The Committee of SMEs was formed by academics from

universities, accounting and auditing practitioners from private
and public sectors, and CPA representatives. The workshop
involved a two-step process that first required the SMEs to
describe the knowledge and skills exhibited by a minimally
competent candidate, and secondly, examine each exam
question to translate the criteria defined above into a cut score
for the Financial Accounting and Reporting exam. It was a wellexecuted and documented assessment standard setting process
which helped protect the exam against legal challenges and
assure the public that the credentialing decisions resulting from
exam scores are fair and valid.
CPA Australia highly valued our contribution to the success of
the workshop. We endeavour to continually assist accounting
professional bodies in building a sustainable and competent
accounting profession in New South Wales.
Fraud Control Better Practice Guide released

In February 2015, the Audit Office released an updated Better
Practice Guide: Fraud Control Improvement Kit. The improvement
kit aligns with Australian Standard AS8001-2008 Fraud and
Corruption Controls and other better practice. The guide updates
the ten attributes of fraud control by emphasising the importance
of developing an ethical framework and establishing the right
fraud control culture.
The improvement kit consists of guidance and a checklist
for each attribute and a series of resources. The guidance is
deliberately concise and intended to provide an overview of key
points, rather than comprehensive instruction on each issue. The
resources are designed to give practical tools for agencies to
meet their fraud control obligations.
In developing the improvement kit, the Audit Office invited

representatives from each of the NSW Government clusters to
attend a workshop designed to get feedback on the current
guidance and suggestions for improvement. Attendees at that
workshop were also given the opportunity to provide comment
on the material. The feedback we received was overwhelmingly
supportive of the proposed updates to the guidance, which
were designed to more closely reflect the current fraud control
challenges faced by the public sector.
To view the guide, see: www.audit.nsw.gov.au/publications/
better-practice-guides.
46
Governance
We have sound corporate governance which
guides us to achieve our purpose
At the Audit Office we:

have
a governance framework that reflects the eight

core principles of good corporate governance

are
committed to legislative compliance

and ethical behaviour

meet
public expectations of probity, accountability

and transparency

have
Raymond Bailey Audit Leader

Client location State Library of New South Wales
a dedicated governance unit to administer,

support and guide our governance processes
Strong governance foundations

Driven by the eight core Australian Securities Exchange (ASX) corporate governance principles
Corporate governance
leading the way
Our governance processes and
behaviours guide us to achieve our
purpose, conform to all relevant laws,
standards and directions and meet public
expectations of probity, accountability
and transparency. They provide our staff
with a clear sense of purpose and focus,
guiding their behaviour when dealing with
each other, our audit clients and other
stakeholders.
Australian Securities Exchange

(ASX) Corporate Governance
Principles and Recommendations
Our governance framework, the
Governance Lighthouse, reflects the
eight core Australian Securities Exchange
(ASX) Corporate Governance Principles.
Under these eight core principles, the
Audit Office has developed 17 major
points of good governance. We use the
Governance Lighthouse as a way to
develop, implement, review and report on
our governance arrangements.
Continuous enhancement
In 201415, we continued to strengthen
our governance framework by:
}}releasing our updated Governance
Lighthouse (see page 58) and Fraud
Control Better Practice Guide (see
page46)
}}conducting the biennial fraud risk
assessment
}}reviewing and enhancing our Gifts and
Benefits Policy
The year ahead

In 201516, we will:
}}review our ethical framework, including
our Professional Independence Policy
}}develop a stakeholder management
plan
}}develop an office-wide risk appetite
statement
}}rolling out new Fraud Control and Gifts

and Benefits training
}}reconsider our key performance

indicators and establish a centralised
office-wide and business unit reporting
and monitoring system
}}implementing our revised Code of

Conduct and related policies
}}develop a governance and ethical

behaviour online training module.
}}reassessing the strategic risks against

our 201415 strategic goals
}}implementing a new Audit Office Policy
Framework
}}improving transparency by establishing
a program for proactive release of
information under the Government
Information (Public Access) Act 2009,
and publishing our gifts and benefits
register
}}developing and publishing a Statement
of Business Ethics
}}redefining the purpose and structure
of our Remuneration Committee. The
committee now provides independent
assurance to the Auditor-General on
the application and appropriateness of
Audit Office remuneration policies.
Governance Lighthouse
17 Key stakeholder management program
16 CEO and management sign-off on internal controls

15 Risk management program
14 Remuneration is fair and responsible
13 Continuous disclosure
12 Annual report
11 CEO and CFO sign-off
10 Internal and external audit
9 Audit and risk committee
8 Compliance framework
7 Fraud and corruption control framework
6 Ethical framework
5 Key governance committees
4
3
2
1
Diversity policy
Clear accountability and delegations
Regular reporting against plans
Leadership and strategic and business plans
48
Setting direction
We have a strong commitment to strategic planning
LIGHTHOUSE PRINCIPLE:
MANAGEMENT AND OVERSIGHT
(based on ASX Principle 1)
Lay solid foundations

The Audit Office of New South Wales
is a statutory authority established under
the Public Finance and Audit Act 1983
to conduct audits for the AuditorGeneral, who is accountable to the NSW
Parliament. The Auditor-General
is responsible for the Audit Office and
its activities.
Our strategic plan

Our 201415 strategic plan was
developed by the Office Executive
and the Leadership Team to meet the
strategic priorities for the Audit Office.
Lead managers and executive sponsors
met every 30 days to review milestones
and key performance indicators and
track progress towards achieving overall
outcomes.
The four focus areas for 201415 were:
Goal for 201415:
We operate in a business-like manner with
competitive models for pricing, resourcing
and outsourcing. Our structure and skill mix
is regularly reviewed, to deliver excellent
products in a transparent manner.
Product Delivery
People
Goal for 201415:
Goal for 201415:
We have a strong understanding of the

public sector to deliver products and services
that have impact and relevance, and improve
client assessment of value for money.
We create a constructive and achievement

oriented environment for our people that
requires them to take opportunities to
achieve their potential. Our people are flexible
and receive regular and honest performance
feedback.
Strategy:
Implement a program to build knowledge
of public sector reforms and government
priorities.
Key achievements include:
}} Improved our understanding of the public
sector and its reform agenda, including
the introduction of regular external
speakers on relevant topics
}} Improved our reporting, as a result of our
improved understanding of what drives

the public sector.
Goal for 201415:
Our leaders are agile and adaptable. They
listen and communicate a shared vision and
direction, model constructive behaviours and
set challenging but realistic goals that are
rigorously pursued with enthusiasm.
Strategies
}} Develop constructive behaviours across
the Leadership Team to build a high
achieving team
}} Articulate and share the Audit Office
vision.
Strategies:
}} Deliver value through the right skills,
resources and structure of audits

}} Formed a shared vision of constructive
behaviour for the Audit Office
}} Implement an outsourcing model
}} The Leadership Team attended a number
for audits with benchmarking and

demonstration of value for money
}} Develop a transparent pricing approach.

}} Designed, built and implemented a new
pricing approach, demonstrating how our
fee rates are set to allow us to break even
over a rolling five-year cycle
}} Developed a pricing statement, explaining
clearly to our clients and stakeholders the

principles applied when developing our
fees
}} Implemented an 'outsourcing and right
resourcing' model for Financial Audit. The

model uses decision inputs to provide
guidance on the right skill and resource
mix for an audit
of workshops, that focused on the

language of change, the language and
behaviours of constructive leaders and the
key elements of constructive leadership
}} The Leadership Team refreshed their
Human Synergistic Learning Styles Index

profiles, sharing results with one another
and their staff. Strategies were developed
during facilitated discussions to improve
team results for constructive styles
}} Created a program of activity for sharing
and embedding our vision into the

organisation. This included working on
new organisational key performance
indicators, which will roll down into our
new staff performance agreements (see
pages 6, 10 and 37).
}} Developed a benchmarking tool to
compare our audit costs to our contract

agent audit costs.
Strategies:
}} Implement a modern employee relations
framework
}} Implement an achievement oriented
performance management framework

}} Implement a reward and recognition
framework
}} Implement a learning and development
strategy to build core capabilities required.

}} Reviewed our reward and recognition
framework and developed new policies
and governance processes
}} Launched revised role descriptions and
aligned with the NSW Public Service

Commissions Capability Framework
(see pages 37 and 42)
}} Modernised our existing executive
contracts, consulting widely with staff

affected, and extended the number of
positions subject to contract (see page 37)
}} Consulted extensively with staff to identify
areas of concern with their current working

conditions
}} Developed new policies to support
the implementation of performance

agreements and the related Performance
Management Framework (see page 37)
}} Introduced MiCareer to support
continuously improving staff performance

(see page 10).
The year ahead

Our 201516 Strategic Plan will build on
the work achieved in 201415, under the
same four strategic focus areas:
Product Delivery
People.
See page 10 for full details on these
strategic focus areas and the goals,
strategies and activities planned for
201516.
49
Structured to add value

Key committees provide leadership and guidance
STRUCTURE
Office Executive
The Auditor-General has established and
delegated operational responsibility to the
Deputy Auditor-General, advised by the
rest of the Office Executive. The Office
Executive comprises the Deputy AuditorGeneral and Assistant Auditors-General
within Financial Audit, Performance Audit
and Corporate Services. The Office
Executive meets informally each week
and formally each month. The monthly
meetings are attended by the AuditorGeneral.
The Office Executive leads and guides
the Audit Office to achieve its strategic
priorities, manage strategic risks, monitor
financial and operational performance and
comply with relevant codes, practices,
laws and directions.
A copy of the Office Executive Charter can

be found on our website at:
Key focus areas for the Office Executive

during 201415 included:
www.audit.nsw.gov.au/about-us/
accessing-information/open-accessinformation.
}}reassessing and tracking progress

against the Audit Office strategy and
vision (see page 10)
In 201415, the Governance Unit

continued to support the Office Executive
by:
}}reviewing the Audit Office's strategic

risks, including rigorous assessment
and monitoring to mitigate each
strategic risk to an acceptable level
}}providing secretarial support

}}ensuring the principles and
requirements of the charter were
followed
}}ensuring the reporting plan was met
}}maintaining a conflict of interest register.
These activities helped the Office
Executive discharge its responsibilities by
having timely and appropriate information
to allow constructive discussion and
adequate lines of enquiry.
}}overseeing key Audit Office

projects, including Elite, the practice
management system project, and
Project Blue (see page 10)
}}ensuring key policies are regularly
reviewed, up-to-date and relevant.
Reports to the Office Executive are
prepared by staff and various committees
in accordance with the meeting agenda
and annual reporting plan. For further
details on the experience and performance
of members of the Office Executive and
the Audit Offices organisational structure,
see pages 8 and 9092.
Our governance framework

NSW
PARLIAMENT

}} Inquires into and reports on activities of
Governance Unit
government that are reported in the Total State

Sector Accounts and the accounts of the State's
authorities
}} Examines Auditor-General's Reports
to Parliament
}} Appoints a reviewer every four years to examine
the auditing practices and standards of the
Auditor-General.
Auditor-General
Appointed by the Governor of
New South Wales for a fixed
non-renewable eight-year term.
AUDIT AND RISK

COMMITTEE
REMUNERATION
COMMITTEE
Deputy Auditor-General
OFFICE EXECUTIVE
Financial Audit
Performance Audit
Corporate Services
50
Audit and Risk Committee

The Audit and Risk Committee is an
advisory committee providing assistance
to the Auditor-General on the Audit
Office's governance processes, financial
reporting, risk management and control
frameworks and its external accountability
obligations. The Audit and Risk Committee
consists of three independent members,
Brian Suttor (Chair), Greg Fletcher and
Dianne Hill. The independence, integrity,
and experience of the Audit and Risk
Committee members are key strengths,
providing insight and enhancing the
operations of the Audit Office.
Brian Suttor, who was reappointed on 28
November 2012 for a final four-year term,
has been a partner in a major accounting
firm and brings an independent
perspective to the committee. He is Chair
of several audit and risk committees of
NSW public sector agencies.
Greg Fletcher was reappointed on

4December 2013 for a final four-year
term, and brings considerable experience
as a former partner in a major accounting
firm where he specialised in external audit,
internal audit and risk management. He
is an Audit and Risk Committee Chair for
several NSW public sector agencies and
a director of a number of publicly listed
companies.
Dianne Hill was reappointed, effective from
29 August 2014, for a further three years,
following an initial one-year term. She
brings considerable experience having
been an independent non-executive
director at a number of organisations for
20 years, and currently sits on several
boards and audit and risk committees for
both NSW public sector agencies and
public companies. Her background is in
chartered accounting, financial services
and project management.
The Auditor-General, internal and external
auditors and management representatives
attend committee meetings. The
committee also met independently,
without management, with the internal and
external auditors.
Monthly formal Office Executive meetings

attended

meetings attended
A total of 11 meetings held
A total of 5 meetings held*
Tony Whitfield
11
Acting Auditor-General from 9 June 2015, Chair
Grant Hehir
Joined 23 October 2014
Dianne Hill
9
}}internal audit reports and the annual

internal audit plan
}}the Audit Offices compliance with
applicable laws and regulations, relevant
government policies and directions
}}the Audit Offices financial statements
and related disclosures.
The committee completed a performance
self-assessment, confirming it effectively
met its obligations and that it is
constituted and operating in accordance
with the requirements of NSW Treasury
Circular NSW TC 09/08 Internal Audit and
Risk Management Policy (for a copy of
our attestation statement see page 56).
Committee members also provided written
declarations to the Auditor-General stating
any potential conflicts of interest which
were verbally confirmed at the start of
each meeting.
The Remuneration Committee was

reconstituted in 201415, and had their
first meeting in June 2015. Please see
page 54 for more information around the
committee, under the Lighthouse Principle
Remuneration.
Independent Member
Paola Rigby
Rob Mathie 3
Retired 5 November 2014
Secretary
Louise Mooney
Bola Oyetunji
}}office-wide risk management

processes, financial and business
risks, including fraud, project risk
management and business continuity
and disaster recovery plans
Independent Member
Steven Martin
In 201415, the committee reviewed:
Remuneration Committee
Chair
Greg Fletcher
Resigned as Auditor-General 10 June 2015
Kathrina Lo
Brian Suttor
A copy of the Audit and Risk Committee

Charter can be found on our website
at www.audit.nsw.gov.au/about-us/
accessing-information/open-accessinformation.
10
*Including one special meeting to review the

annual financial statements
Acting Assistant Auditor-General from 25 May 2015

11
Scott Stanton
Acting Deputy Auditor-General from 9 June 2015
John Viljoen
Paola Rigby
9
11
Secretary
51
Ethical and responsible decision-making

We are driven by strong values and ethical behaviour
ETHICS
High standards of conduct are

instilled
We aim to be recognised for our
independence and integrity. To do this,
we foster a culture that strongly values
ethical behaviour, integrity, respect
and professionalism throughout the
organisation.
Our framework for managing ethical and
lawful behaviour includes our Code of
Conduct, which we reviewed against both
the best practice standards and the Public
Service Commission's Ethical Framework
for the Public Sector. The Audit Office's
Professional Independence Policy and
Gifts and Benefits Policy provide guidance
for managing actual and perceived
conflicts of interest, and the acceptance of
gifts and benefits.
During induction, all new staff are trained
on our policies around ethical and lawful
behaviour. All staff are required to sign
the Code of Conduct and Professional
Independence Policy when they join the
Audit Office, and then re-sign annually.
In 201415, we assessed our Gifts and
Benefits Policy against the Public Service
Commission directive Managing Gifts
and Benefits: Minimum Standards. As
a result, we strengthened our policy and
procedures by:
}}explicitly disallowing staff to solicit gifts
and benefits, not just for themselves but
also for relations, friends or associates
and being mindful of gifts and benefits
received by relations, friends or
associates that could be perceived as
an attempt to influence staff behaviour
}}requiring staff to be alert to gifts and
benefits offered by potential suppliers
and not just actual suppliers
}}providing further guidance to staff when
deciding to accept or not accept by
adopting the reasonable person test
}}being clear on the potential
consequences of breaches of our Gifts
and Benefits Policy
}}publishing our gifts and benefits register
and our newly developed statement of
business ethics on our website. This
provides greater transparency and
clearer expectations and obligations for
third parties acting on our behalf.
Protecting privacy
Compliance management
The Audit Office is committed to

protecting individual privacy and managing
personal information in accordance with
the Privacy and Personal Information
Protection Act 1998. We comply with the
Act by ensuring personal information:
The Audit Office has many compliance

obligations including legislation, central
agency directions, standards and
codes. To meet these obligations, our
compliance program promotes the
importance of compliance to all staff,
identifies obligations and responds to
noncompliance.
}}collection is lawful, direct, open and

relevant
The Audit Offices compliance framework

is based on International Standard ISO
19600-2014 Compliance Management
Systems Guidelines, and includes:
}}is stored securely

}}access is transparent
}}use is accurate and limited
}}disclosure is restricted and
safeguarded.
During 201415, we undertook a review
of our compliance with the privacy
legislation. We assessed our level of
compliance as high and that we have
appropriate processes and systems in
place to manage personal information. We
did identify some areas for improvement
around collecting information from
new members of staff, and in 201516
the Governance Unit will work with
the business to implement these
improvements.
Zero tolerance for fraud

The Audit Office has zero tolerance for
fraud and is committed to minimising fraud
by implementing and regularly reviewing
strategies that prevent, detect and
investigate fraud.
Our Fraud Control Framework is based
on ten fraud control attributes within the
themes of prevention, detection and
response. We adhere to the Australian
Standard AS 8001-2008 Fraud and
Corruption Controls. The Auditor-General
reports suspected fraud, internally or at
other organisations, to the Independent
Commission Against Corruption.
During 201415, we:
}}conducted our biennial fraud control
risk assessment
}}rolled out fraud control and gifts and
benefits training to all staff.
No internal suspected or actual frauds
were reported during 201415.
}}a Compliance Policy, reviewed in June

2015
}}a Register of Compliance Obligations
that includes a risk assessment, and is
formally reviewed twice a year
}}annual verification of compliance
through the Management Internal
Control Sign-Off (see page 56)
}}financial and performance audit
methodologies mapped to professional
standards and legislation
}}regular management reviews and
reporting to the Office Executive and
Audit and Risk Committee.
A centralised policy register was
developed during 201415. The register
captures all key internal policies and
allows for better oversight of policies
ensuring they are kept up-to-date and
remain relevant.
The year ahead

In 201516, in line with our Operational
Excellence and People strategic focus
areas, we will:
}}conduct the biennial fraud health check
}}review our approach to fraud control to
ensure it aligns with our updated Fraud
Control Better Practice Guide
}}develop an ethical behaviour training
module for all staff.
(For more information on our
strategic focus areas, see page 10.)
52
Safeguarding the integrity of corporate reporting

Sound financial reporting structure
CORPORATE REPORTING
The integrity of our financial information is

safeguarded by several key mechanisms.

The Audit and Risk Committee
independently reviews the objectivity and
reliability of the Audit Offices financial
information, and ensures the financial
statements are supported by appropriate
management sign-off on the adequacy of
internal controls. At each meeting, financial
reports and budgets are presented to the
committee for review. A special meeting is
held annually to review the annual financial
statements (see page51).
Internal audit
Our internal auditors add value and
improve our operations by monitoring
and providing independent and objective
assurance to the Audit and Risk
Committee and ultimately the AuditorGeneral. The internal audit function brings
a systematic, disciplined approach to
evaluate and improve organisational
systems, processes and reporting. The
internal auditors attend each quarterly
Audit and Risk Committee meeting to
report on the progress of the Internal
Audit Plan and present the findings of
their reviews. Our internal audit function is
externally resourced.
External audit
Performance reporting
Pursuant to Section 47 of the Public

Finance and Audit Act 1983, the
Governor of New South Wales appointed
an independent audit practitioner to
annually audit the Audit Offices financial
statements. The external auditor, Nexia
Australia, provides an independent opinion
on whether the Audit Offices financial
statements are true and fair and comply
with applicable Australian Accounting
Standards. The external auditor also
attends all Audit and Risk Committee
meetings.
In 201415, the Audit Office reviewed its

key performance indicators with a focus
on improving our reporting, which will help
us achieve the goals of our four strategic
focus areas (see page 10).
Quality assurance
}}expenditure
Quality assurance in the Audit Office is

monitored through the Audit and Risk
Committee, the Office Executive and
through various reviews including:
}}payroll
}}parliamentarian and client surveys (see

pages 12, 13, 20 and 21)
}}our practice management system

project, Elite post-implementation
review
}}an annual program of internal audits

}}regular peer reviews of financial and
performance audit processes
}}internal quality reviews of our audits for
compliance with applicable professional
standards and legislative requirements
}}four-yearly Public Accounts Committee
reviews of the Audit Office (see page 18)
}}benchmarking against other State audit
offices (see pages 5, 1315 and 21)
In 201415, the internal auditors reviewed:
}}reviewing trends within complaints

received which may identify any areas
for improvement.
}}the Records Management Project

benefit realisation review
Auditor-General and Management

Internal Control Sign-Off
}}the information security management

system
The Auditor-General certifies that the

financial statements give a true and fair
view and are prepared in accordance
with applicable Australian Accounting
Standards, the Public Finance and Audit
Act 1983, the Public Finance and Audit
Regulation 2010, the Financial Reporting
Code for NSW General Government
Sector Entities and the Treasurer's
Directions.
}}revenue
}}procurement
}}the implementation of a number
of technology improvements to
communications, including Microsoft
Lync
}}the audit methodology replacement
project, Iris (see page 44) postimplementation review
}}the human resources framework
project, Project Blue (see page 10)
pre-implementation review
}}previous internal audit findings.
The year ahead

In 201516, in line with our four strategic
focus areas, our internal auditors will
review:
}}the information security management
system
}}our human resources framework

project, Project Blue postimplementation review
}}Audit Office readiness for Public

Accounts Committee quadrennial
review
}}budget setting process
}}previous internal audit findings.
The Audit Office's independent assurance
activities will look more closely at wholeof-office reporting, including revised key
result areas, goals, key performance
indicators and our current strategic focus
areas.
This sign-off is supported by the

Management Internal Control Sign-Off
(see page 55). The Executive Manager,
Finance, provides written assurance that
the financial statements are founded on
a sound system of risk management and
internal control. A checklist of minimum
required procedures for this process is
also completed.
53
Disclosure timely and balanced

We are committed to fair and responsible disclosure and remuneration
DISCLOSURE
The third access application was deemed

to be an invalid application as it requested
access to excluded information
(see Appendix Ten).
Accountability and transparency
We received two informal requests for

information. Both related to excluded
information and therefore access was not
granted. We also received two requests
from other government agencies for our
consent to release information. One was
approved as the information was already
in the public domain, and the second was
not as it related to excluded information.
Accountability and transparency are

directly aligned with our 'Operational
Excellence' strategic focus area
(see page 10).
We are committed to proactively disclosing
information to the public and key
stakeholders and release information on
our website about planned financial and
performance audits.
Our Continuous Disclosure Policy
further demonstrates our commitment
to accountability and transparency and
explains how we provide information to the
public. We keep the public informed about
our performance, expenditure of public
funds and any significant issues through
our annual report, the Auditor-Generals
Reports to Parliament and updates to our
website.
Open access information

We comply with the Government
Information (Public Access) Act 2009 (the
GIPA Act or GIPA).
The Audit Office holds a significant
amount of government information, the
majority of which we use for our financial
and performance audit services. We also
hold a smaller amount of information
dealing with administrative matters.
Members of the public can request
information held by the Audit Office that
is not on the website and we try to deal
with requests informally with no charge.
Information held by us which relates to
our auditing, investigative and reporting
functions is classed as excluded
information under the GIPA Act and is
not released to the public. Our Right to
Information Officer provides advice about
what can and cannot be released under
the GIPA Act.
In 201415, we:
}}published relevant audit and assurance
policies on our website as part of a
program of proactive release
}}reviewed our Information Guide
}}developed a strategy for the proactive
release of information.
During 201415, we received three GIPA
applications. Partial access was granted
to two of the applications. Full access
was not provided as both applications
contained, in part, requests for information
relating to the Auditor-Generals
investigative, audit and reporting functions.
Award-winning annual report

Our annual report is a key part of our
commitment to continuous disclosure
and we voluntarily adopt full and open
reporting on our performance. The report
contains extensive comment on what our
key stakeholders, parliament and our audit
clients think of our services.
One of the key measures of our success,
whether agencies have accepted and
acted on our recommendations, is
documented in the report. As we only have
the power to inform and influence, agency
acceptance of our recommendations is
central to our success as an organisation
and features in the report (6, 1617, 22
and 33).
In recognition of our high standard
in annual reporting, we won a Gold
Australasian Reporting Award for our
201314 Annual Report, making it the
sixth consecutive year we have received
this award.
sign-offs to support remuneration policies

and decisions. The Assistant AuditorGeneral, Corporate Services and the
Executive Manager, Human Resources
provide advice and information to the
committee.
A charter was developed outlining the
committees key responsibilities, reporting
lines and a code of conduct. In 201415,
the committee:
}}completed written conflict of interest
declarations and confidentiality
agreements
}}endorsed the committees new charter
}}reviewed management reports on
the appropriateness of remuneration
policies and procedures including that
these policies and procedures:
clearly explain remuneration
principles
lead to remuneration packages that
are reasonable, fair and responsible
attract, retain and motivate people of
the highest quality
incorporate a level of disclosure that
encourages those involved in the
process to be accountable for their
decisions
comply with laws and government
policy
comply with procedural fairness.
}}reviewed management reports to
confirm the Audit Office has consistently
and equitably applied remuneration
policies and procedures for the June
2015 remuneration assessment
}}reviewed management sign-offs,
including validating the financial
impact of the recommended annual
remuneration determination.
REMUNERATION
Remuneration Committee
In 201415, the Audit Office Remuneration
Committee was reconstituted to
become more independent and provide
assurance to the Auditor-General on
the appropriateness and application of
Audit Office remuneration policies. The
committee now has two members an
independent Chair, Dianne Hill and
the Executive Manager, Governance,
Barry Underwood, who is effectively
independent of the remuneration process.
Secretariat support is provided by the
Governance Unit. The committee is
directly responsible and accountable to
the Auditor-General for the exercise of its
responsibilities.
See Appendix One for details of our

executive remuneration.
The year ahead

In 201516, in line with our Operational
Excellence and Product Delivery
strategic focus areas, we will:
}}publish our 201415 Annual Report in
an interactive online version to promote
best practice reporting and improve
transparency and accessibility
}}undertake our annual review of
compliance with the GIPA Act.
strategic focus areas, see page 10).
The Deputy Auditor-General provides the

committee with relevant management
54
Risks recognised and managed

Our risk management framework is embedded in our strategy
RISK MANAGEMENT
Recognising and managing risk

Our Risk Management Framework is
embedded in our strategic and operational
policies and practices. The AuditorGeneral assumes ultimate responsibility
for our Risk Management Framework.
We maintain and regularly review our risk
registers for key strategic, operational and
significant project risks.
The Audit and Risk Committee regularly
reviews how we address key strategic
risks and the Office Executive reviews
the strategic risk register and undertakes
detailed analysis of each strategic risk over
the course of the year.
Our Risk Management Framework is
developed in line with NSW Treasurys
Internal Audit and Risk Management
Policy for the NSW Public Sector (TPP
09-05, now 15-03), the Risk Management
Toolkit (TPP 12-03), the Australian/New
Zealand Risk Management Standard, AS/
NZS ISO 31000:2009, and the Accounting
Professional and Ethical Standards
Boards professional risk management
standard, APES 325 Risk Management
for Firms.
In 201415, we reviewed and updated
our strategic risks and delivered risk
management training to key Financial
Audit staff.
Our insurance cover is provided by the
Treasury Managed Fund in respect of:
}}workers compensation according to
NSW statute
}}property (full replacement, new for
old, consequential loss, and business
continuity costs or losses of revenue)
}}liability, including but not limited to
public liability, professional indemnity
and directors and officers liability
}}motor vehicles
}}miscellaneous losses including those
due to staff dishonesty, personal
accident, and protection for local and
overseas travel.
Strategic risks
In 201415, our six key strategic risks were:
}}failure to anticipate, manage and live up
to stakeholder expectations and to fulfil
our mandate
The year ahead

In 201516, in line with our 'Operational
Excellence' strategic focus area, we will:
}}failure to achieve efficiencies and

demonstrate value for money
}}undertake further risk management

training for key staff in line with our
strategic goals and strategies
}}our audit opinions and reports do not

meet our quality standards
}}develop a risk appetite statement for

the Audit Office.
}}internal governance failure

}}failure to effectively manage our

workforce
}}inability to adapt to and influence
changes in audit mandate.
Risk management and internal

control attestation
To provide additional assurance that
the Audit Offices Risk Management
Framework and related controls are
operating properly, two attestations are
completed each year. The first relates
to the quality of the Audit Offices risk
management and internal audit, and the
other attests to the adequacy of internal
controls that we have in place to address
our risks. The Auditor-General annually
attests to the quality of Audit Office risk
management and internal audit processes.
This is based on an annual review of our
compliance with the core requirements
of NSW Treasury Circular NSW TC 09/08
Internal Audit and Risk Management
Policy (see our Internal Audit and Risk
Management Attestation statement on
page 56).
Internal control attestation

The Management Internal Control Sign-Off
is completed annually in line with the Audit
Offices financial statements and covers
the financial year. Managers sign off on
the quality of the internal controls they are
responsible for and compliance with our
policies.
Our Internal Control Policy and Framework
is based on internal control guidelines
recommended by the Committee of
Sponsoring Organisations of the Treadway
Commission.
Exposures not included are:

}}illegal activities
}}wear and tear and inherent vice
}}pollution (not being sudden and
accidental pollution).
55
Internal audit and risk management attestation

Proving assurance of risk management and internal audit processes
Internal Audit and Risk Management Attestation for the 2014-2015 Financial Year for the Audit Office of New
South Wales
I, Tony Whitfield, am of the opinion that The Audit Office of New South Wales has internal audit and risk management processes in
operation that are, in all material respects, compliant with the core requirements set out in Treasury Circular NSW TC 09/08 Internal
Audit and Risk Management Policy. These processes provide a level of assurance that enables the senior management of the Audit
Office of New South Wales to understand, manage and satisfactorily control risk exposures.
I, Tony Whitfield, am of the opinion that the Audit and Risk Committee for the Audit Office of New South Wales is constituted and
operates in accordance with the independence and governance requirements of Treasury Circular NSW TC 09/08, excluding the
exception below.
Treasury Circular NSW TC 09/08 Internal Audit and Risk Management Policy, requires that the Chair of the Audit and Risk Committee
must be appointed for a maximum term of four years. For reasons of continuity and maintaining robust and effective leadership of the
Audit and Risk Committee, the Chair had been reappointed for a further and final four year term. To reinforce the independence of the
Audit and Risk Committee, all members are independent.
Treasury Circular NSW TC 09/08 Internal Audit and Risk Management Policy, also requires that the Internal Audit function, whether
in-house or outsourced, is externally assessment at least every five years. This is not considered necessary as the performance of our
outsourced internal audit function is assessed at least annually by the Audit Offices Audit and Risk Committee and every three years
as part of the tender to outsource the service. The internal audit function also has quality assurance processes to ensure its internal
audit activities are conducted in accordance with relevant professional standards including International Standards for the Professional
Practice of Internal Auditing issued by the Institute of Internal Auditors.
The Chair and Members of the Audit and Risk Committee are:
}}Independent Chair, Brian Suttor, re-appointed on 28 November 2012 for a final four year term
}}Independent Member, Greg Fletcher, re-appointed on 4 December 2013 for a final four year term
}}Independent Member, Dianne Hill, appointed 29 August 2013 for a four year term.
A T Whitfield PSM
24 August 2015
56
Stakeholder engagement
We regularly connect with our stakeholders
KEY STAKEHOLDER RIGHTS
}}maintaining effective relationship

management and communication
strategies and processes
Building effective relationships
}}achieve positive satisfaction ratings

from audit clients
}}delivering value through the right skills,

resources and structure of audits
}}implementing an outsourcing model
for audits with benchmarking and
demonstration of value for money
}}building knowledge of public sector
reforms and government priorities.
The Auditor-General met regularly with our
stakeholders, including parliamentarians,
the secretaries of all nine clusters, the
Independent Commission Against
Corruption Commissioner, the NSW
Ombudsman and the Public Service
Commissioner.
The Auditor-General and Deputy AuditorGeneral also meet regularly with NSW
Treasury and the Department of Premier
and Cabinet.
Our targeted engagement was supported
by our senior management team who
continue to meet regularly with our audit
clients including the Chief Executive
Officers and Chief Financial Officers of
agencies, and Audit and Risk Committees.
Our strategic risk, Failure to anticipate,
manage and live up to stakeholder
expectations and to fulfil our mandate
is key to our stakeholder engagement
activity by:
}}assisting parliament in holding
government accountable for achieving
its priorities and reform agenda
Our strategic focus areas of Operational

Excellence and Product Delivery will
remain key drivers for achieving effective
stakeholder relationships which will
ultimately deliver our vision, Making a
difference through audit excellence.
We will:
We consulted our stakeholders widely

when developing our performance audit
three-year plan and published it on our
website to promote ongoing comment
and feedback.
}}revisit our key external stakeholder

communication and engagement plan
to strengthen our relationship with
parliament and the Public Accounts
Committee
We conducted our annual survey of audit

clients and Audit and Risk Committee
Chairs, to gain their feedback on our
performance and target areas where
we can improve (see pages 2021 for
more details). Due to the election in New
South Wales in 2015, we did not survey
parliamentarians.
}}continue to seek feedback from

our audit clients and Audit and Risk
Committee Chairs on our performance
Public interest disclosures

The Auditor-General has the power
to examine allegations of serious and
substantial waste of public money under
the Public Interest Disclosures Act 1994.
This Act protects public officials who make
such public interest disclosures in good
faith. We examined eight public interest
disclosures in 201415, none of which
demonstrated serious and substantial
financial waste.
During 201415, we reviewed our internal
and external public interest disclosures
policies to align with the model policy
issued by the NSW Ombudsman. We
also consolidated the centralisation of
complaints handling and management
of public interest disclosures into our
Governance Unit.
}}issuing recommendations that add

value
}}continue to consult with stakeholders

on our three-year performance audit
plan.
Number of public interest disclosures

27
23
19
16
2015
}}having a transparent pricing approach

for our clients
We aligned the themes in our financial

audit volumes with the government
priorities in the State Plan NSW 2021 and
the governments reform agenda to better
deliver relevance and value to parliament
through our reports. Our reports focus on
four themes financial reporting, financial
controls, governance and service delivery.
2014
Our 201415 strategic focus areas

Product Delivery, and Operational
Excellence' (see page 10) were key drivers
to achieve effective stakeholder relations
through:
2013
}}NSW Government agencies.
}}be well-regarded, respected, relevant

and credible and as a result our
recommendations are adopted.
2012
}}NSW Parliament
}}adopt government reform agenda

principles
In 201516, we will ensure our work

continues to deliver clear, positive
outcomes for New South Wales through
assisting parliament to hold government
to account for its use of public resources.
We will achieve this by working closely
with the Public Accounts Committee and
assisting them with their response to our
recommendations to agencies.
2011
In 201415, we maintained our focus on

building effective relationships with our key
stakeholders:
The year ahead
57
Stakeholder engagement (continued)

We regularly connect with our stakeholders
Complaints management
We are committed to actively seeking
and using feedback to improve our
performance and services. We regularly
report to the Office Executive on
complaints received.
In 201415, we received two complaints
about the Audit Office itself and 54
complaints about other agencies (15 per
cent increase in complaints from the prior
year). Of the two complaints received
about the Audit Office one was related
to the content of an audit report and one
was related to an audit opinion issued by
the Audit Office.
The 54 complaints about other agencies

were varied in nature and across all
government clusters. The most common
complaints (22 per cent) were about
the Transport cluster, particularly on
infrastructure projects. We refer many of
the complaints we receive to Financial
Audit and Performance Audit for
information and/or action.
Thirteen per cent of complaints were
about local councils which are outside our
mandate. Where complaints are outside
our mandate, we try to provide more
appropriate contacts for the complainant.
Working with the public and other

watchdog agencies
We work closely with other watchdog
agencies in New South Wales and audit
offices in other jurisdictions to improve our
services and increase the impact of our
work. This includes our important work
in responding to public complaints and
public interest disclosures where serious
and substantial waste is involved. We
refer complaints involving allegations of
corruption, maladministration or privacy
to the Independent Commission Against
Corruption, the NSW Ombudsman, the
Information and Privacy Commission or to
other watchdog agencies.
Case study
Continuing to contribute to public sector governance
The Governance Lighthouse strategic early warning system

In February 2015, the Audit Office released a revised version of its Governance
Lighthouse containing updates to the eight principles and 17 key governance
components first published in 2011. The lighthouse provides practical advice and
resources on implementing successful governance in the public sector, and is the
guideline we use to structure our governance framework.
The revised guidance recognises the wider government desire for more open and
transparent government and the critical importance of culture to a successful
governance framework. The guide focuses on the need for independent governance
committees, acting ethically and responsibly, the link between risk management and
strategic planning, performance information on key metrics and a formal compliance
process.
Other factors that influenced the changes to the lighthouse included:
}}the release of the NSW Public Service Commissions ethical framework
}}updates to the 3rd edition of the ASX Corporate Governance Principles and
Recommendations, released in March 2014
}}the June 2014 update of the Australian National Audit Office Public Sector
Governance Strengthening Performance through Good Governance, Better
Practice Guide'
}}the results of our 2012 surveys on internal audit and risk management and fraud
control.
58
Finances
We have a financial framework that supports
our business objectives
We aim to:

break
even over the medium-term

collect
Gearoid Fitzgerald Senior Auditor

Client location Sydney Royal Botanic Gardens

pay
our debts within a reasonable time
our creditors promptly
Financial performance
Meeting our goal to break even over the medium-term
$0.4 million deficit (excluding superannuation adjustments) over 5 years, a cumulative result
achieving our medium-term break-even target
The work of the Audit Office is largely selffunded, generated from audit fees paid by
our clients. These fees are set to cover our
expenses while maximising value for the
NSW public sector. Unlike private sector
auditors, we aim to break even overall
rather than make a profit.
In monitoring our financial performance,
we exclude the impact of the annual
superannuation adjustments that affect
our operating results. Like all government
agencies with staff in the States defined
benefit superannuation schemes, the
schemes assessment of our liability to
them varies substantially from year to
year. These annual variations are outside
our control and reflect the investment
performance of the schemes and changes
in actuarial assumptions and disclosure
requirements of the Australian Accounting
Standards.
These superannuation adjustments are
fully reflected in our audited financial
statements, but are excluded from the
information presented here so we can
focus on our own performance.
Audit fees increased by $1 million

compared to the previous year. Total
expenditure, excluding superannuation
adjustments, is $1 million higher than last
year. Employee related expenses were
consistent across the two years. Other
expenditure also remained consistent
with the prior year. Contract audit agent
costs increased by $1 million. This is
consistent with our ongoing strategy
around the rotation of contracted out
work which, amongst other things,
allows us to measure our performance
against the private sector. Depreciation
and amortisation expense increased by
$0.5million due to investment in new
software including our audit methodology
and practice management system.
Budgeting
We are budgeting for a $0.8 million surplus
in 201516. Revenue is expected to be
$45 million, about four per cent more than
the 201415 actual of $43million. We
expect our expenditure to be consistent
overall with 201415.
Our 201415 operating loss was $1million
less than budget. This was largely due
to audit fee revenue being $2 million less
than expected and lower investment
income.
Total expenses were $3 million less than
budget. This was due to lower staff, data
and telephone expenses offset by higher
recruitment and consultancy costs, and
lower than expected capitalised expenses.
Operating results/$m
Excluding superannuation
1.0
0.8
2015
2014
2013
2011
2012
Our 201415 result was a loss of

$0.5 million, excluding defined benefit
superannuation adjustments. Over the
five years to 201415, the cumulative
result was a small deficit of $0.4 million
representing one per cent of average
turnover, a result impacted by the
investment in systems to improve audit
service delivery, practice management and
human capital management frameworks
(see page 10 for details).
Our 201415 revenue of $43 million was

$1 million more than the previous years
$42 million. Government agencies paid
$36 million for the audit of their financial
statements. Parliament contributed
$7million towards our performance
audits and reports to parliament. Our
201415 total expenditure of $44million,
excluding the defined benefit schemes
superannuation adjustments, was
$1million more than the previous years
$43 million.
2016 TARGET
Close to our break-even target
-0.2
-0.3
-0.4
-0.5
60
Financial position
Our financial management is sound
Our financial position is sound

Most of our assets and liabilities are of a
financial rather than physical nature, as we
do not own major buildings or machinery.
We report a net liability position as a result
of the actuarial losses on the defined
benefit superannuation schemes. While
we do not have net liabilities, we are a
going concern as we have a sustainable
level of cash with positive cashflows.
Cash remains our largest asset with
$9million at 30 June 2015. The increased
cash balances were primarily due to
improved focus on our collection of
receivables, together with reduced capital
investment in 201415 compared to
previous years.
Our assets include $7 million for the
Crowns assumption of the liability for our
staffs long service leave entitlements. This
offsets the liability in our accounts. We
also have $5 million in receivables, mostly
from government agencies for our auditing
services.
Effective solvency, debtor

management needs to improve
Our current ratio at 30 June 2015 shows
we had $1.80 in current assets to meet
every $1.00 of our current liabilities. This
is a small increase on the previous years
ratio and still at the upper level of our
target range of between $1.00 and $2.00.
Our debtors continue to take longer to pay
than our agreed invoice terms of 14 days.
In 201415, it took us an average of 44
days from invoice to collection.
Timely creditor payments

During the year we paid 94 per cent of
our creditors on time. We are expected
to pay all creditors within 30 days, unless
contracts state otherwise.
The year ahead

In 201516, we will be driven by our
'Operational Excellence' strategic goal to:
}}
use
our new performance agreement

frameworks to reinforce the financial
responsibilities of all staff
}}
improve our efficiency and productivity
by improving information made available
at all levels in the business
}}
improve the capacity to share costing
information with all clients
}}
embed our new pricing approach and
work to ensure our clients understand
and support it.
For more detail on our performance with

creditor payments, see Appendix Seven.
Our liabilities at 30 June 2015 were

$53million, increased from $48million in
the previous year. This is mainly due to
an increase in superannuation liabilities to
$40million, from $34 million in 2014.
Debtor management
average days to collect
Solvency current ratio

2.0
1.9
53
1.5 to 2
1.8
1.7
1.8
44
46
42
44
2016 TARGET
2015
2014
2013
2012
2011
2016 TARGET
2015
2014
2013
2012
2011
28
61
Key financial statistics
201011
$'000
201112
$'000
201213
$'000
201314
$'000
201415
$'000
Five year trend

Financial performance1
Total revenue
39,102
42,859
42,541
42,271
43,021
Total expenses
39,392
41,869
42,659
42,658
43,534
(2)
(38)
(22)
(292)
990
(156)
(409)
(513)
(Loss) on disposal
Operating profit/(loss)
Financial position
Total assets
Accumulated funds
26,206
28,823
28,555
27,587
26,020
1,370
(31,303)
(19,601)
(20,288)
(26,696)
Solvency and debtor management

Current ratio
Average days to collect debts
1.9
1.8
1.7
1.8
44
46
53
42
44
201415
Budget
$'000
201415
Actual
$'000
201516
Budget
$'000
44,607
42,567
44,540
Interest
250
148
150
Other revenue
104
306
206
Total revenue
44,961
43,021
44,896
33,876
30,886
33,424
Other expenses including operating expenses, maintenance, loss on disposal and

finance costs
8,382
7,788
5,549
Contract audit agent costs
2,135
3,133
3,388
Depreciation and amortisation
1,975
1,727
1,761
Total expenditure
46,368
43,534
44,122
Operating (loss)
(1,407)
(513)
774
Performance against budget1

Revenue
Audit fees
Expenditure
Salaries and related expenses
Includes impact of changes in accounting policies for Revenue and Work In Progress and excludes defined benefit superannuation scheme adjustments of
$1,733,000 in 201415 ($1,843,000 in 201314 and $2,226,000 in 201213).
62
Financial Report
Independent Auditor's Report
64
Statement by Acting Auditor-General of

New South Wales
65
Statement of comprehensive income
66
Statement of financial position
67
Statement of changes in equity
68
Statement of cash flows
69
Notes to and forming part of the financial statements
Daniel Lau Senior Auditor

Client location Sydney Opera House Trust
1 Summary of significant accounting policies
70
2 Expenses excluding losses
79
3 Revenue
80
4 Loss on disposal
80
5 Superannuation
81
6 Current assets cash and cash equivalents
84
7 Current assets receivables
85
8 Other financial assets
85
9 Non-current assets property, plant

and equipment
86
10 Intangible assets
87
11 Current/non-current assets other
88
12 Current liabilities payables
88
13 Current/non-current liabilities provisions
88
14 Current/non-current liabilities other
89
15 Commitments for expenditure
90
16 Contingent assets and contingent liabilities
90
17 Auditor's remuneration
90
18 Audit and Risk Committee
90
19 Budget review
90
20 Reconciliation of cash flows from operating

activities to net results
92
21 Financial instruments
92
22 Events after the reporting period
94
Independent Auditor's Report

to the Members of the New South Wales Parliament
To the Members of the New South Wales Parliament

I have audited the accompanying financial statements of the Audit Office of New South Wales (the Audit Office), which comprises the
Statement of Financial Position as at 30 June 2015, the Statement of Comprehensive Income, the Statement of Changes in Equity,
and the Statement of Cash Flows for the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information.
Auditor-General's Responsibility for the Financial Statements

The Auditor-General of New South Wales is responsible for the preparation of the financial statements that give a true and fair view in
accordance with Australian Accounting Standards and the Public Finance and Audit Act 1983 (PF&A Act), and for such internal control
as the Auditor-General determines is necessary to enable the preparation of financial statements that give a true and fair view and that
are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
My responsibility is to express an opinion on the financial statements based on my audit. I conducted my audit in accordance with
Australian Auditing Standards. Those Standards require that I comply with relevant ethical requirements relating to audit engagements
and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors judgement, including an assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entitys preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
Auditor-General of New South Wales, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
My opinion does not provide assurance:
}}
about the future viability of the Audit Office;
}}
that it has carried out its activities effectively, efficiently and economically;
}}
about the effectiveness of its internal control;
}}
about the assumptions used in formulating the budget figures disclosed in the financial statements;
}}
about the security and controls over the electronic publication of the audited financial statements on
any website where they may be
presented; and
}}
about other information which may have been hyperlinked to or from the financial statements.
Independence
In conducting my audit, I have complied with the independence requirements of the Australian Auditing Standards and other relevant
ethical pronouncements.
Auditor's Opinion
In my opinion, the financial statements:
}}
give
a true and fair view of the financial position of the Audit Office as at 30 June 2015, and of its financial performance
and its cash flows for the year then ended in accordance with Australian Accounting Standards; and
}}
are in accordance with section 41B of the Public Finance and Audit Act 1983 (the 'PF&A Act') and the Public Finance
and Audit Regulation 2010.
Lester Wills
Chartered Accountant
Sydney, 26 August 2015
64
Statement by Acting Auditor-General of New South Wales

for the year ended 30 June 2015
Under section 41C of the Public Finance and Audit Act 1983, I state that, in my opinion, the accompanying financial statements and
notes thereto exhibit a true and fair view of the financial position of the Audit Office of New South Wales at 30 June 2015 and its
performance for the year then ended.
I further state:
(a) that the financial statements and notes thereto comply with applicable Australian Accounting Standards, the Public Finance and
Audit Act 1983, the Public Finance and Audit Regulation 2010, the Financial Reporting Code for NSW General Government Sector
Entities and the Treasurer's Directions.
(b) that I am not aware of any circumstances which would make any details in the financial statements misleading or inaccurate.
A T Whitfield PSM
Sydney, 26 August 2015
65

Statement of comprehensive income for the year ended 30 June 2015
Actual 2015
Budget 2015
Actual 2014
Notes
$'000
$'000
$'000
employee related
2(a)
32,619
33,876
32,927
other operating expenses
2(b)
10,848
10,180
10,114
2(c)
1,727
1,975
1,278
Finance costs
2(d)
19
18
Other expenses
2(e)
54
337
164
45,267
46,368
44,501
Expenses excluding losses

Operating expenses
TOTAL EXPENSES EXCLUDING LOSSES
Revenue
Sale of goods and services
3(a)
42,567
44,607
41,943
Investment revenue
3(b)
148
250
199
Other revenue
3(c)
306
104
129
43,021
44,961
42,271
22
(2,246)
(1,407)
(2,252)
TOTAL REVENUE
Loss on disposal
NET RESULT
Other comprehensive income
Items that will not be reclassified to net result:
Superannuation actuarial gain/(loss) on liabilities
(9,241)
(4,276)
Superannuation actual return on Fund assets less interest income
5,079
5,841
Total remeasurement in other comprehensive income
(4,162)
1,565
(6,408)
(1,407)
(687)
TOTAL COMPREHENSIVE INCOME

The accompanying notes form part of these financial statements.
66

Statement of financial position as at 30 June 2015
Notes
Actual 2015
$'000
Budget 2015
$'000
Actual 2014
$'000
Cash and cash equivalents
8,871
3,236
6,949
Receivables
4,885
7,513
6,747
Other financial assets
871
642
Assets
Current assets
Other
11
6,083
6,830
6,791
20,710
17,579
21,129
plant and equipment
504
1,131
719
leasehold improvements
428
572
842
Total property, plant and equipment
932
1,703
1,561
Total current assets

Non-current assets
Property, plant and equipment
Intangible assets
10
3,849
6,170
4,540
Other
11
529
430
357
5,310
8,303
6,458
26,020
25,882
27,587
Total non-current assets

Total assets
Liabilities
Current liabilities
Payables
12
2,380
2,376
2,336
Provisions
13
8,789
10,093
9,987
Other
14
37
232
109
11,206
12,701
12,432
41,507
30,355
35,403
Total current liabilities

Non-current liabilities
Provisions
13
Other
14
77
40
Total non-current liabilities
41,510
30,432
35,443
Total liabilities
52,716
43,133
47,875
(26,696)
(17,251)
(20,288)
Accumulated funds
(26,696)
(17,251)
(20,288)
Total equity
(26,696)
(17,251)
(20,288)
Net liabilities
Equity
67

Statement of changes in equity for the year ended 30 June 2015
Notes
Balance at 1 July 2014
Accumulated Funds
$'000
(20,288)
Net result for the year
(2,246)
Other comprehensive income:

Superannuation actuarial loss and return on Fund assets
Total comprehensive income for the year
(4,162)
(6,408)
Balance at 30 June 2015
(26,696)
Balance at 1 July 2013
(19,601)
Net result for the year
(2,252)

Superannuation actuarial gain and return on Fund assets
Total comprehensive income for the year
Balance at 30 June 2014
1,565
(687)
(20,288)
68

Statement of cash flows for the year ended 30 June 2015
$'000
Budget 2015
$'000
Actual 2014
$'000
(30,046)
(34,065)
(31,963)
Actual 2015
Notes
Cash flows from operating activities

Payments
Employee related
Other
(19,454)
(10,517)
(14,921)
Total payments
(49,500)
(44,582)
(46,884)
47,357
44,607
42,549
164
250
236
4,807
104
4,578
52,328
44,961
47,363
2,828
379
479
Purchases of property, plant and equipment
(647)
(540)
(104)
Intangible assets
(259)
(2,463)
(2,555)
Net cash flows from investing activities
(906)
(3,003)
(2,659)
Net increase/(decrease) in cash
1,922
(2,624)
(2,180)
Opening cash and cash equivalents
6,949
5,860
9,129
8,871
3,236
6,949
Receipts
Interest received
Other
Total receipts
Net cash flows from operating activities
20
Cash flows from investing activities
Closing cash and cash equivalents
69

Notes to and forming part of the financial statements for the year ended 30 June 2015
1. Summary of significant
accounting policies
(a) Reporting entity
The Audit Office of New South Wales (the 'Audit
Office') is a NSW government entity. The Audit
Office is a not-for-profit entity (as profit is not
its principal objective). Its financial report is
consolidated as part of the NSW Total State
Sector Accounts.
These financial statements for the year ended
30 June 2015 have been authorised for issue
by the Acting Auditor-General on 26 August
2015.
(b) Basis of preparation
The Audit Office's financial statements are
general purpose financial statements which
have been prepared on an accruals basis and in
accordance with:
}}
applicable Australian Accounting Standards
(which include Australian Accounting

Interpretations)
}}
the requirements of the Public Finance and
Audit Act 1983 and Public Finance and

Audit Regulation 2010
}}
the Financial Reporting Directions published
in the Financial Reporting Code for NSW

General Government Sector Entities or
issued by the Treasurer.
The Audit Office incurred a deficit of $2,246,000
(2014: $2,252,000) and a net liability position
is reported as a result of the recognition of the
actuarial valuation losses on the defined benefit
superannuation schemes. The liability is a
long-term non-current liability. A triennial review
is being undertaken and will be applicable
as at 30 June 2016. The 2012 triannual
review is applicable as at June 2015, and the
economic assumptions were reviewed. The
Audit Office had not been required to make
employer contributions for a number of years
to these schemes and we do not foresee any
contributions in the near future. The solvency
ratio of the Audit Office increased to 1.8 (2014:
1.7) and the cash balance is at a sustainable
level with positive actual cash flows from
operating activities. The assumption that the
Audit Office is a going concern is justified.
Property, plant and equipment are measured at
fair value. Other financial statement items are
prepared in accordance with the historical cost
convention.
Judgements, key assumptions and estimations
management has made are disclosed in the
relevant notes to the financial statements.
All amounts are rounded to the nearest one
thousand dollars and expressed in Australian
currency.
(c) Statement of compliance
The financial statements and notes comply with
Australian Accounting Standards, which include
Australian Accounting Interpretations.
(d) Insurance
Insurance activities are conducted through the
NSW Treasury Managed Fund Scheme of self
insurance for Government entities. The expense
(premium) is determined by the Fund Manager
based on past claim experience.
(e) Accounting for the Goods
and Services Tax (GST)
Income, expenses and assets are recognised
net of the amount of GST except for:
}}
the amount of GST incurred as a purchaser
that is not recoverable from the Australian

Taxation Office (ATO), which is recognised as
part of the cost of acquisition of an asset or
as part of an item of expense
}}
receivables and payables are stated with
the amount of GST included.

Cash flows are included in the statement
of cash flows on a gross basis. However,
the GST components of cash flows arising from
investing activities which are recoverable from,
or payable to the ATO are classified
as operating cash flows.
(f) Income recognition
Income is measured at the fair value of the
consideration or contribution received or
receivable. Additional comments regarding
the accounting policies for the recognition of
income are discussed below.
(i) Rendering of services audit fees
Revenue from rendering of service is recognised
by reference to the stage of completion of audit
assignments at the reporting date. The revenue
is recognised when:
a) the amount of revenue, stage of completion
and transaction costs incurred can be reliably
measured
b) the probable economic benefits associated
with the transaction will flow to the Audit Office.
The stage of completion of audit assignments at
the reporting date is determined by reference to
the proportion that costs incurred to date bear
to the estimated total costs of the transaction.
(ii) Investment revenue
Interest revenue is recognised using the
effective interest method as set out in AASB
139 Financial Instruments: Recognition and
Measurement.
(g) Assets
(i) Acquisition of assets
Assets acquired are initially recognised at cost.
Cost is the amount of cash or cash equivalents
paid or the fair value of the other consideration
given to acquire the asset at the time of its
acquisition or construction or, where applicable,
the amount attributed to that asset when initially
recognised in accordance with the requirements
of other Australian Accounting Standards.
Assets acquired at no cost, or for nominal

consideration, are initially recognised at their fair
value at the date of acquisition.
Fair value is the price that would be received to
sell an asset in an orderly transaction between
market participants at measurement date.
Where payment for an asset is deferred beyond
normal credit terms, its cost is the cash price
equivalent, i.e. the deferred payment amount is
effectively discounted at an asset-specific rate.
(ii) Capitalisation thresholds
Property, plant and equipment and intangible
assets individually costing $1,000 and above
or forming part of a network costing more than
$1,000 are capitalised.
(iii) Revaluation of property, plant
and equipment
Physical non-current assets are valued in
accordance with the 'Valuation of Physical
Non-Current Assets at Fair Value' Policy and
Guidelines Paper (TPP 14-01). This policy
adopts fair value in accordance with AASB
13 Fair Value Measurement and AASB 116
Property, Plant and Equipment.
Property, plant and equipment is measured at
the highest and best use by market participants
that is physically possible, legally permissible
and financially feasible. The highest and best
use must be available at a period that is not
remote and take into account the characteristics
of the asset being measured. In most cases,
after taking into account these considerations,
the highest and best use is the existing use.
Fair value of property, plant and equipment is
based on market participant's perspective,
using valuation techniques (market approach,
cost approach, income approach) that
maximise relevant observable inputs and
minimise unobservable inputs.
Under AASB 13 Fair Value Measurement,
non-specialised assets with short useful lives
measured using depreciated historical cost as
an approximation of fair value do not require
fair value hierarchy disclosures. Our plant and
equipment are measured by this method and it
has been assessed that any difference between
fair value and depreciated historical cost is
unlikely to be material.
(iv) Impairment of property, plant
and equipment
As a not-for-profit entity with no cash generating
units, impairment under AASB 136 Impairment
of Assets is unlikely to arise. AASB 136 modifies
the recoverable amount test to the higher of
fair value less costs to sell and depreciated
replacement cost. This means, that where
an asset is already measured at fair value,
impairment can only arise if selling costs
are material. Selling costs are regarded as
immaterial.
70

(v) Depreciation of property, plant
and equipment
Depreciation is provided for on a straight-line
basis for all depreciable assets to write off their
depreciable amount as it is consumed over its
useful life as follows:
}}
computer equipment three years
}}
office equipment five years
}}
furniture and fittings ten years
}}
leasehold improvements over the term
of the lease.
(vi) Restoration costs
The estimated cost of restoration for our
leasehold improvements is included in this asset
to the extent it is recognised as a liability.
(vii) Maintenance
Day-to-day servicing costs or maintenance of
assets are charged as expenses as incurred.
Where they relate to the replacement of a
part or component of an asset, the costs are
capitalised and depreciated.
(viii) Leased assets
A distinction is made between finance leases
which effectively transfer from the lessor to the
lessee substantially all the risks and benefits
incidental to ownership of the leased assets,
and operating leases where the lessor does not
transfer substantially all the risks and benefits.
Operating lease payments for office
accommodation and motor vehicles are
recognised as expenses on a straight-line basis
over the period of the lease term.
(ix) Intangible assets
Intangible assets are recognised only if it is
probable that future economic benefits will flow
to the Audit Office and the cost of the asset
can be measured reliably. Intangible assets are
measured initially at cost. Where an asset is
acquired at no or nominal cost, the cost is its
fair value at the date of acquisition.
All research costs are expensed. Development
costs are only capitalised when certain criteria
are met.
The useful lives of intangible assets are
assessed to be finite.
Intangible assets are subsequently measured
at fair value only if there is an active market.
As there is no active market for our intangible
assets, the assets are carried at cost less any
accumulated amortisation.
All intangible assets are amortised using the
straight-line method over a period of three to
ten years, as follows:
}}
audit methodology software ten years
}}
management information systems (MIS)
software five years

}}
other software licences three to five years.
Intangible assets are tested for impairment
where an indicator of impairment exists. If the

recoverable amount is less than its carrying
amount, the carrying amount is reduced to
recoverable amount and the reduction is
recognised as an impairment loss.
(x) Receivables
Receivables are recognised at fair value based
on the original invoice amount. The receivables
are due for settlement within fourteen days
from the date of issue of the invoice, hence are
not amortised or discounted as the effect of
discounting is immaterial.
(xi) Other financial assets
Work in progress (WIP) represents staff time
measured at standard charge rates and other
expenses directly chargeable to the client,
which were unbilled to the client at balance
date.
WIP is assessed for impairment annually and
is not carried at an amount in excess of its
recoverable amount.
(xii) Impairment of financial assets
All financial assets, most notably, receivables,
are reviewed on an ongoing basis. An allowance
for impairment is established when there is
objective evidence that the amounts due will not
be collected. The amount of the allowance is
the difference between the receivable's carrying
amount and the present value of estimated
future cash flows, discounted at the effective
rate.
The amount of the impairment loss is
recognised in the net result for the year. Any
reversals of impairment losses are reversed
through the net result for the year, where there
is objective evidence of recovery.
(xiii) Derecognition of financial assets and
financial liabilities
A financial asset is derecognised when the
contractual rights to the cash flows from the
financial assets expire or if all the risks and
rewards have substantially been transferred.
A financial liability is derecognised when
the obligation specified in the contract is
discharged, cancelled or expires.
(xiv) Other assets
Other assets are recognised on a historical cost
basis.

The 'Crown Acceptance of Long Service Leave
Liability' is recognised as an asset, which is
offset by the liability.
(h) Liabilities
(i) Payables
The Audit Office carries liabilities for trade
creditors and other payables, which are initially
recognised at fair value, usually based on the
transaction cost or face value. These payables
are subsequently measured at an amortised
cost using the effective interest rate method.

Trade payables with no stated interest rate are
measured at the original invoice amount where
the effect of the discounting is immaterial.
(ii) Employee benefits and related on-costs
provisions
(a) Salaries and wages, annual leave,
sick leave and on-costs
Liabilities for salaries and wages, including nonmonetary benefits, annual leave and sick leave
are measured on an undiscounted basis. Where
annual leave is not expected to be settled within
12 months, it is accounted for as a long-term
benefit at the present value in accordance with
AASB 119 Employee Benefits.
Unused non-vested sick leave entitlement does
not give rise to a liability as it is considered that
sick leave taken in the future will not be greater
than the benefits accrued in the future.
(b) Long service leave

The Crown Finance Entity takes on the Audit
Office's liability for long service leave. The liability
is accounted for and then offset by showing a
corresponding asset as 'Crown Acceptance of
Long Service Leave Liability'. It is a statutory
asset/liability and not considered as a financial
asset/liability within the scope of AASB 7
Financial Instruments: Disclosures.
A long service leave liability is recognised as
a long-term employee benefit and measured
for all employees with five or more years of
service. The present value method based on
remuneration rates approved to be payable
post 30 June, is used to measure the liability.
The on-cost factors specified in NSW Treasury
Circular 15/09 are applied when calculating the
liability.
(c) Superannuation
The superannuation expense for the financial
year is determined by using the formulae
specified in the Treasurer's Directions. The
expense for certain superannuation schemes
(i.e. First State Super) is calculated as a
percentage of the employees' salary. For
other superannuation schemes (i.e. State
Superannuation Scheme and State Authorities
Superannuation Scheme), the expense is
calculated as a multiple of the employees'
superannuation contribution.
The superannuation schemes for the
AuditOffice are:
}}
the State Superannuation Scheme (SSS)
}}
the State Authorities Superannuation
Scheme (SASS)
}}
the State Authorities Non-Contributory
Superannuation Scheme (SANCS Basic

Benefits Scheme)
}}
the First State Super Scheme (FSS) and
other schemes to receive Superannuation

Guarantee Contributions (SGC).
71

The first three schemes are multi-employer

defined benefit schemes. At least a component
of the final benefit is derived from a multiple
of member salary and years of membership.
Members receive lump sum or pension
benefits on retirement, death, disablement and
withdrawal. The Pooled Fund holds in trust the
investments of these closed NSW public sector
superannuation schemes.
The schemes in the Pooled Fund are
established and governed by the following NSW
legislation: Superannuation Act 1916, State
Authorities Superannuation Act 1987, Police
Regulation (Superannuation) Act 1906, State
Authorities Non-Contributory Superannuation
Scheme Act 1987, and their associated
regulations.
The schemes in the Pooled Fund are exempt
public sector superannuation schemes under
the Commonwealth Superannuation Industry
(Supervision) Act 1993 (SIS). The SIS Legislation
treats exempt public sector superannuation
funds as complying funds for concessional
taxation and superannuation guarantee
purposes.
Risks
There are a number of risks to which the Fund
exposes the Audit Office. The more significant
risks relating to the defined benefits are:
}}
Investment risk The risk that investment
returns will be lower than assumed and

the Audit Office will need to increase
contributions to offset this shortfall
}}
Longevity risk The risk that pensioners
live longer than assumed, increasing future

pensions
}}
Pension indexation risk The risk that
pensions will increase at a rate greater than

assumed, increasing future pensions
}}
Salary growth risk The risk that wages or
salaries (on which future benefit amounts for

active members will be based) will rise more
rapidly than assumed, increasing defined
benefit amounts and thereby requiring
additional employer contributions
}}
Legislative risk The risk is that legislative
changes could be made which increase the

cost of providing the defined benefits.
Under a Heads of Government agreement, the

New South Wales Government undertakes to
ensure that the Pooled Fund will conform with
the principles of the Commonwealths retirement
incomes policy relating to preservation, vesting
and reporting to members and that members
benefits are adequately protected.
The defined benefit fund assets are invested

with independent fund managers and have
a diversified asset mix. The Fund has no
significant concentration of investment risk or
liquidity risk.
The New South Wales Government prudentially

monitors and audits the Pooled Fund and
the Trustee Board activities in a manner
consistent with the prudential controls of the
SIS legislation. These provisions are in addition
to other legislative obligations on the Trustee
Board and internal processes that monitor the
Trustee Boards adherence to the principles of
the Commonwealths retirement incomes policy.
There were no fund amendments, curtailments

or settlements during the year.
An actuarial investigation of the Pooled Fund is

performed every three years. The last actuarial
investigation was performed at 30 June 2012.
The next acturial investigation is due as at 30
June 2015 and the report is expected to be
released by the end of 2015.
Other entities' responsibilities for the
governance of the fund
The Fund's Trustee is responsible for the
governance of the Fund. The Trustee has a legal
obligation to act solely in the best interests of
fund beneficiaries. The Trustee has the following
roles:
}}
administration of the fund and payment to
the beneficiaries from fund assets when

required in accordance with the fund rules;
}}
management and investment of the fund
assets
}}
compliance with other applicable regulations.
Significant events
Asset-Liability matching strategies

The Trustee monitors its asset-liability risk
continuously in setting its investment strategy.
It also monitors cashflows to manage liquidity
requirements. No explicit asset-liability matching
strategy is used by the Trustee.
Funding arrangements
Funding arrangements are reviewed at least
every three years following the release of the
triennial actuarial review and was last reviewed
following completion of the triennial review as at
30 June 2012. Contribution rates are set after
discussions between the Audit Office, STC and
NSW Treasury.
The next triennial review as at 30 June 2015,
the report is expected to be released by the end
of 2015.
Funding positions are reviewed annually and
funding arrangements may be adjusted as
required after each annual review.
The Audit Office has no ongoing liability for

First State Superannuation (FSS) and the other
SGC schemes because they are accumulation
schemes.
d) Consequential on-costs
Consequential costs to employment are
recognised as liabilities and expenses where the
employment benefits to which they relate have
been recognised. This includes outstanding
amounts of payroll tax, workers' compensation
insurance premiums, fringe benefits tax and
superannuation.
(iii) Other provisions
The provisions are recognised when there are
legal or constructive obligations as a result of
a past event, it is probable that an outflow of
resources will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation.
Provisions for the restoration costs of our
leasehold improvements asset are recognised.
(i) Equity and reserves
Accumulated funds:
The accumulated funds include all current and
prior period retained funds.
(j) Budgeted amounts
The budgeted amounts are drawn from
the original budgeted financial statements
presented to Parliament. Other amendments
made to the budget are not reflected in the
budgeted amounts.
(k) Comparative information
Where necessary, the comparatives are reclassified and re-positioned to be consistent
with current year disclosures except when an
Australian Accounting Standard permits or
requires otherwise.
(l) Changes in accounting policies
(i) New Australian Accounting Standards
issued but not yet effective
At the reporting date, a number of accounting
standards and interpretations adopted by the
AASB had been issued but not yet operative
and have not been early adopted by the Audit
Office. The initial application of these standards
will have no material impact on our financial
results. The standards are operative for annual
reporting periods ending after 30 June 2015.
AASB 119 requires detailed narrative

information regarding the key actuarial
assumptions underlying the reported
superannuation figures. Note 5 details
the disclosures provided by the Schemes
Administrator's actuary.
Actuarial gains and losses are recognised
immediately in other comprehensive income in
the year in which they occur.
72

2015
$'000
2. Expenses excluding losses
2014
$'000
(a) Employee related expenses

Salaries and wages (including annual leave)
24,909
25,525
Superannuation defined benefits plans (Note 5)
1,733
1,843
Superannuation defined contribution plans
2,369
1,832
653
844
Long service leave

Workers' compensation insurance
73
103
Payroll tax and fringe benefits tax
1,650
1,627
Redundancy
767
Temporary employees
465
1,153
32,619
32,927
Employee related costs of $75,000 (2014: $754,000) have been capitalised to fixed and intangible asset accounts and are excluded from the above.
(b) Other operating expenses include the following:

Auditor's remuneration
audit of the financial statements
37
36
1,609
1,567
Maintenance*
570
363
Insurance
42
32
Operating lease rental expense

minimum lease payments
Consultants
Other contractors
361
521
4,838
3,605
Staff development and training (excluding salaries)
868
941
Fees for services rendered
920
1,229
1,603
1,820
10,848
10,114
Other operating expenses
Fees for services rendered of $139,000 (2014: $262,000) have been capitalised to fixed and intangible asset accounts and are excluded from the above.
*Reconciliation total maintenance

Maintenance expense contracted labour and other (non-employee related), as above
Employee related maintenance expense included in Note 2(a)
Total maintenance expenses included in Note 2(a) + 2(b)
570
363
570
363
(c) Depreciation and amortisation expense

Depreciation
leasehold improvements
425
426
plant and equipment
352
385
777
811
950
467
1,727
1,278
19
18
54
164
Amortisation
intangible assets
Total depreciation and amortisation expense
(d) Finance costs
Unwinding of the discount rate for the make-good of premises
(e) Other expenses
Legal
73

3. Revenue
2015
$'000
2014
$'000
42,567
41,943
(a) Sale of goods and services

Rendering of services audit fees
(b) Investment revenue
Interest received
148
199
(c) Other revenue

Recoupment of salaries and oncosts
Other
286
121
20
306
129
22
4. Loss on disposal
Plant and equipment
74

5. Superannuation
The defined benefit schemes from 30 June 2014 have remained at an unfunded liability position, a net movement of $5,895,000 (2014:
$278,000). Employer contributions to all funds have been suspended since 1 December 2005.
The following information has been prepared by the Scheme actuary.
2015
$'000
2014
$'000
34,337
34,059
507
549
Net interest on the Net Defined Benefit Liability
1,226
1,294
Superannuation expense in profit and loss
1,733
1,843
(5,079)
(5,841)
65
8,699
3,711
477
565
4,162
(1,565)
40,232
34,337
64,011
59,777
Interest income
2,212
2,189
Actual return on Fund assets less Interest income
5,079
5,841
Reconciliation of the Net Defined Benefit Liability

Net Defined Benefit Liability at start of year
Expenses:
Current service cost

Actual return on Fund assets less Interest income
Actuarial losses arising from changes in demographic assumptions
Actuarial losses arising from changes in financial assumptions
Actuarial losses arising from liability experience
Amount recognised in other comprehensive income
Net Defined Benefit Liability at end of year
Reconciliation of the fair value of Fund assets
Fair value of Fund assets at beginning of the year
Employer contributions
Contributions by participants
273
339
(4,368)
(4,446)
380
310
Transfers in
Contributions to the accumulation section
Settlements
Exchange rate changes
67,587
64,010
Benefits paid
Taxes, premiums and expenses paid
Fair value of Fund assets at end of the year
75

2015
$'000
2014
$'000
98,348
93,836
507
549
3,438
3,484
273
339
65
8,699
3,711
477
565
(4,368)
(4,446)
Reconciliation of the defined benefit obligation

Present value of defined benefit obligations at beginning of the year
Current service cost
Interest cost
Contributions by participants
Actuarial losses arising from changes in demographic assumptions
Actuarial losses arising from changes in financial assumptions
Actuarial losses arising from liability experience
Benefits paid
Taxes, premiums and expenses paid
380
310
Transfers in/out due to business contributions and disposals
Contributions to the accumulation section
Past service cost
Settlements
Exchange rate changes
107,819
98,348
Present value of defined benefit obligations at end of the year
Fair value of Fund assets

All Pooled Fund assets are invested by SAS Trustee Corporation (STC) at arm's length through independent fund managers. Assets
are not separately invested for each entity and it is not possible or appropriate to disaggregate and attribute fund assets to individual
entities. As such, the disclosures below relate to total assets of the Pooled Fund managed by Pillar on behalf of the NSW public sector.
As at 30 June 2015
Quoted prices in
active markets for
identical assets
Significant
observable
inputs
Unobservable
inputs
Level 1
Level 2
Level 3
Total
Asset category
$'000
$'000
$'000
$'000
Percentage
invested in each
asset class
Short-term securities
95,603
2,545,913
2,641,516
6.5%
958
2,638,759
16,881
2,656,598
6.6%
(110)
1,003,959
1,003,849
2.5%
Australian equities
9,898,541
503,999
4,400
10,406,940
25.7%
International equities
Australian fixed interest

International fixed interest
9,963,287
2,585,150
563,044
13,111,481
32.4%
Property
948,421
718,406
1,785,782
3,452,609
8.6%
Alternatives
622,102
3,020,225
3,527,860
7,170,187
17.7%
21,528,802
13,016,411
5,897,967
40,443,180
100.0%
TOTAL*
* Additional to the assets disclosed above, at 30 June 2015 the Pooled Fund has provisions for receivables estimated to be around $1.74 billion. This gives total
estimated assets of $42.2 billion.
Level 1 quoted prices in active markets for identical assets or liabilities. The assets in this level are listed shares; listed unit trusts.
Level 2 inputs other than quoted prices observable for the asset or liability either directly or indirectly. The assets in this level are cash; notes; government, semigovernment and corporate bonds; unlisted trusts where quoted prices are available in active markets for identical assets or liabilities.
Level 3 inputs for the asset or liability that are not based on observable market data. The assets in this level are unlisted property; unlisted shares; unlisted
infrastructure; distressed debt; hedge funds.
Derivatives, including futures and options, can be used by investment managers. However, each manager's investment mandate
clearly states that derivatives may only be used to facilitate efficient cashflow management or to hedge the portfolio against market
movements and cannot be used for speculative purposes or gearing of the investment portfolio. As such managers make limited use
of derivatives.
76

Fair value of entity's own financial instruments
The disclosures below relate to total assets of the Pooled Fund.
The fair value of the Pooled Fund assets as at 30 June 2015 include $209.2 million in NSW government bonds.
Of the direct properties owned by the Pooled Fund:
}}
GPNSW occupies part of a property owned by the Pooled Fund with a fair value of $159 million (30 June 2014: $153 million).
}}
NSW Ambulance occupies part of a property 50% owned by the Pooled Fund with a fair value of $204 million (30 June 2014: $205 million).
Significant Actuarial Assumptions at the Reporting Date
As at
30 June 2015
30 June 2014
3.03% pa
3.57% pa
2.50% 2015/2016 to 2018/2019;

3.50% 2019/2020; 3.00% pa
2021/2022 to 2024/2025; 3.50% pa
thereafter
2.27% pa to June 2015, then 2.50%

pa to 30 June 2018, 3.00% pa from
1 July 2018 to 30 June 2023, and
3.50% pa thereafter
Rate of Consumer Price Index (CPI) increase
2.50% 2015/2016; 2.75% 2016/2017

& 2017/2018; 2.50% pa thereafter
2.50% pa
Pensioner mortality
The pensioner mortality assumptions

are as per the 2012 Actuarial
Investigation of the Pooled Fund.
These assumptions are disclosed
in the actuarial investigation report
available from the trustee's website.
The report shows the pension mortality
rates for each age.
as per the 2012 Actuarial investigation

of the Pooled Fund
Discount rate
Salary increase rate (excluding promotional increases)
77

Sensitivity analysis
The Audit Office's total defined benefit obligation as at 30 June 2015 under several scenarios is presented below. The total defined
benefit obligation disclosed is inclusive of the contribution tax provision which is calculated based on the asset level at 30 June 2015.
Scenarios A to F relate to sensitivity of the total defined benefit obligation to economic assumptions, and scenarios G and H relate to
sensitivity to demographic assumptions.

Base case
Scenario A
-1.0%
discount rate
ScenarioB
+1.0%
discount rate
3.03%
2.03%
4.03%
Rate of CPI increase
as above
as above
as above
Salary inflation rate
as above
as above
as above
Defined benefit obligation (A$'000)
107,819
126,158
93,068
Scenario D
-0.5% rate of
CPI increase
Discount rate
Base case
Scenario C
+0.5% rate of
CPI increase
Discount rate
as above
as above
as above
as above
above rates plus

0.5% pa
above rates less

0.5% pa
as above
as above
as above
107,819
115,904
100,480
Scenario F
-0.5% salary
increase rate
Base case
Scenario E
+0.5% salary
increase rate
Discount rate
as above
as above
as above
as above
as above
as above
as above
above rates plus

0.5% pa
above rates less

0.5% pa
107,819
108,433
107,222
Base case
ScenarioG
+5% pensioner
mortality rates
ScenarioH
-5% pensioner
mortality rates
107,819
106,551
109,162
The defined benefit obligation has been recalculated by changing the assumptions as outlined above, whilst retaining all other
assumptions.
78

Surplus/deficit
The following is a summary of the 30 June 2015 financial position of the Fund calculated in accordance with AAS 25 Financial Reporting
by Superannuation Plans:
2015
$'000
2014
$'000
57,199
56,884
Net market value of Fund assets
(67,587)
(64,011)
Net surplus
(10,388)
(7,127)
Accrued benefits*
* There is no allowance for a contribution tax provision with the Accrued Benefits figure for AAS 25. Allowance for contributions tax is made when setting the
contribution rates.
Contribution recommendations
Recommended contribution rates for the Audit Office are:
SASS
multiple of
member
SANCS
contributions % member salary
NIL
SSS
multiple of
member
contributions
NIL
N/IL
Economic assumptions
The economic assumptions adopted for the 30 June 2012 actuarial investigation of the Pooled Fund are:
Weighted average assumptions
2015
2014
Expected rate of return on Fund assets backing current pension liabilities
8.3% pa
8.3% pa
Expected rate of return on Fund assets backing other liabilities
7.3% pa
7.3% pa
2.7% pa to 30
June 2018, then
4.0% thereafter
2.7% pa to 30
June 2018, then
4.0% pa thereafter
2.5% pa
2.5% pa
Expected salary increase rate (excluding promotional salary increases)
Expected rate of CPI increase
Economic contributions
SASS
SANCS
SSS
Financial year to 30 June 2016

Expected employer contributions
6. Current assets cash and cash equivalents
2015
$'000
2014
$'000
Cash at bank and on hand
8,871
6,949
Maturity profile of defined benefit obligation

The weighted average duration of the defined benefit obligation is 14.4 years.
For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and cash on hand.
Cash and cash equivalent assets recognised in the statement of financial position are reconciled at the end of the financial year to the
statement of cash flows as follows:
Cash and cash equivalents (per statement of financial position)
8,871
6,949
Closing cash and cash equivalents (per statement of cash flows)
8,871
6,949
Refer Note 21 for details regarding credit risk, liquidity risk and market risk arising from financial instruments.
79

7. Current assets receivables
2015
$'000
4,368
Prepayments
Interest receivable
GST receivable from ATO
2014
$'000
6,178
311
227
71
87
135
255
4,885
6,747
Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired, are disclosed in Note 21.
8. Other financial assets

Work in progress
871
642
Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired, are disclosed in Note 21.
80

9. Non-current assets property, plant and equipment
2015:
Plant and
Equipment
$'000
Leased Assets
(Leasehold
Improvements)
$'000
TOTAL
$'000
2,063
3,096
5,159
(1,344)
(2,254)
(3,598)
719
842
1,561
2,200
3,107
5,307
(1,696)
(2,679)
(4,375)
504
428
932
At 1 July 2014 fair value

Gross carrying amount
Accumulated depreciation
Net carrying amount
At 30 June 2015 fair value
Net carrying amount
Reconciliation
A reconciliation of the carrying amount of each class of property, plant and equipment at the beginning and end of the current reporting
period is set out below:
Year ended 30 June 2015
Net carrying amount at start of year
719
842
1,561
Additions
137
11
148
Disposals
(352)
(425)
(777)
504
428
932
2,242
3,095
5,337
(1,219)
(1,828)
(3,047)
1,023
1,267
2,290
Depreciation expense
Net carrying amount at end of year
2014:
At 1 July 2013 fair value
Net carrying amount
At 30 June 2014 fair value
Net carrying amount
2,063
3,096
5,159
(1,344)
(2,254)
(3,598)
719
842
1,561
Reconciliation
A reconciliation of the carrying amount of each class of property, plant and equipment at the beginning and end of the prior reporting
period is set out below:
1,023
1,267
2,290
Additions
103
104
Disposals
(283)
(283)
Depreciation expense
(385)
(426)
(811)
Write-back of depreciation on disposal
261
261
719
842
1,561
81

10. Intangible assets
2015:
Systems
Software
$'000
Intangible
Assets Under
Development
$'000
TOTAL
$'000
At 1 July 2014
Cost (gross carrying amount)
4,362
1,890
6,252
(1,712)
(1,712)
2,650
1,890
4,540
5,489
241
5,730
Accumulated amortisation
(1,881)
(1,881)
Net carrying amount
3,608
241
3,849
Net carrying amount
At 30 June 2015
The fully depreciated Financial Management and Practice Management Systems ($781,000) were written off during the year.
The replacement system ($1,890,000) became operational and has been included under Systems Software. The Human Capital
Management System ($241,000) remains under development at 30 June 2015.
Reconciliation
A reconciliation of the carrying amount of each class of intangible assets at the beginning and end of the current reporting period is set out below:
2,650
1,890
Transfer from systems development to software
1,890
(1,890)
18
241
259
Retirements/disposals
(781)
(781)
Amortisation (recognised in 'depreciation and amortisation')
(950)
(950)
Additions
Write-back of amortisation on retirement/disposal

4,540
781
781
3,608
241
3,849
2014:
At 1 July 2013
Net carrying amount
2,739
1,482
4,221
(1,977)
(1,977)
762
1,482
2,244
4,362
1,890
6,252
(1,712)
(1,712)
2,650
1,890
4,540
At 30 June 2014
Net carrying amount
Reconciliation
A reconciliation of the carrying amount of each class of intangible assets at the beginning and end of the prior reporting period
is set out below:
762
1,482
2,244
Transfer from systems development to software
1,316
(1,316)
Additions
1,039
1,724
2,763
Retirements/disposals
(732)
(732)
Amortisation (recognised in 'depreciation and amortisation')
(467)
(467)
732
732
2,650
1,890
4,540
Write-back of amortisation on disposal

82

11. Current/non-current assets other
2015
$'000
2014
$'000
Crown acceptance of long service leave liability current
6,083
6,791
529
357
6,612
7,148
Accrued salaries, wages and on-costs
876
842
Creditors and accruals
943
930
Payroll tax
121
119
GST payable to ATO
440
445
2,380
2,336
Crown acceptance of long service leave liability non-current
12. Current liabilities payables
Details regarding credit risk, liquidity risk and market risk, including a maturity analysis of the above payables, are disclosed in Note 21.
13. Current/non-current liabilities provisions

Employee benefits and related on-costs
Annual leave
1,784
2,145
Long service leave
6,612
7,148
40,232
34,337
978
1,089
49,606
44,719
876
842
50,482
45,561
8,789
9,987
40,817
34,732
690
671
Non-current
41,507
35,403
TOTAL PROVISIONS
50,296
45,390
Superannuation (Note 5)
Related on-costs
Employee benefits provision
Accrued salaries, wages and on-costs (Note 12)
Aggregated employee benefits and related on-costs
Provisions
Current
employee benefits provision
Non-current
employee benefits provision
Other provisions leasehold improvements restoration costs
83

a) Employee benefits and related on-costs
Annual leave
The liability at 30 June 2015 was $1,784,000 (2014: $2,145,000). This is based on leave entitlements at 30 June using remuneration
rates to be payable post 30 June.
Of this liability, the value expected to be paid within twelve months is $1,181,000 (2014: $1,302,000) and $603,000 (2014: $843,000)
after twelve months. This calculation of leave for the next twelve months is the minimum required to be taken to achieve the target of a
maximum of 30 days at 30 June 2016.
Leave paid and entitlement for the year are as follows:
2015
$'000
2014
$'000
Balance at beginning of the financial year
2,145
2,371
Less: Value of leave paid during the year
(2,520)
(2,277)
(375)
94
Add: Value of increased entitlement during the year
2,159
2,051
Balance at the end of the financial year
1,784
2,145
The amount of annual leave as disclosed above is increased by on-costs in the determination of the total provision.
Long service leave
The total liability at 30 June 2015 was $6,612,000 (2014: $7,148,000) shown as current $6,083,000 (2014: $6,791,000) and noncurrent $529,000 (2014: $357,000). This liability comprises:
Short term expected to be settled within 12 months
Long term not expected to be settled within 12 months
198
703
6,414
6,445
6,612
7,148
Contributions of $762,000 (2014: $844,000) were made to the Crown Finance Entity pool account during this financial year, which
included leave transfers received from other agencies ($109,000). Reimbursements from the Crown Finance Entity because of payments
to staff, or transfers of entitlements to other agencies, were $1,789,000 (2014: $1,468,000).
The amount of long service leave as disclosed above is increased by on-costs in the determination of the total provision.
(b) Other provisions
Restoration costs
The costs of restoration for the leasehold improvements at 1 Margaret Street are recognised as a provision in accordance with AASB
137 Provisions, Contingent Liabilities and Contingent Assets. The provision for the costs of restoration is reviewed to cover three
financial years. The last valuation was conducted on 30 June 2013 with the assistance of Government Property Authority.
Movements in provision during the financial year are set out below:
Carrying amount at the beginning of financial year
Additional provisions recognised
Unwinding/change in the discount rate
Carrying amount at end of financial year
671
653
19
18
690
671
72
37
37
37
109
40
40
149
14. Current/non-current liabilities other

Current other
Fees in advance audit fees
Rental incentive
Non-current other
Rental incentive other
84

15. Commitments for expenditure
(a) Capital commitments
Aggregate capital expenditure for the acquisition of intangible assets contracted for at balance date and not provided for:
2015
$'000
2014
$'000
Not later than one year
180
Total (including GST)
180
1,957
1,391
131
1,563
2,088
2,954
(b) Operating lease commitments

Future non-cancellable operating lease rentals not provided for and payable:
Not later than one year
Later than one year and not later than five years
Total (including GST)
Commitments exist for leased accommodation, purchase orders and motor vehicles under operating leases.
These commitments include GST of $190,000 (2014: $285,000). A contingent asset exists for the calculated GST, being an input tax
credit recoverable from the ATO after these payments.
16. Contingent assets and contingent liabilities

At the reporting date, aside from those mentioned in Note 15, the Audit Office was not aware of any other contingent assets or
contingent liabilities.
17. Auditor's remuneration

In April 2014, the Governor appointed Mr Lester Wills, a partner of Nexia Court & Co, to audit our accounts for a period of three years,
commencing in the 201314 financial year. Nexia Court & Co does not provide any other services to the Audit Office. Refer to Note 2(b).
18. Audit and Risk Committee

The Audit Office has three independent members on the Audit and Risk Committee. Mr Brian Suttor was appointed as Chair on 28
November 2008 and is paid $12,552 per year. His appointment as chairperson has been extended for a final four year term. Mr Greg
Fletcher was appointed as a member on 4 December 2009 and is paid $6,275 per year. His appointment as independent member has
been extended for a final four year term. Ms Dianne Hill was appointed as an independent member on 29 August 2013. Her term is for
four years and is paid $6,275 per year.
19. Budget review

Net result
The actual net result was unfavourable to the budgeted net result by $839,000. The major variations to budgets are:
Total Revenue was $1,940,000 unfavourable to budget, mainly in sale of goods and services and investment revenue. The sale of goods
and services was $2,040,000 lower than budget due to reduced audit production, which is consistent with lower employee related
expenses. The fall in interest rates during the year also contributed to lower investment revenue.
Total Expenses were $1,101,000 favourable to budget, primarily due to lower employee related expenses. The employee related
expenses were $1,257,000 lower than budget because of reduced full-time staff numbers needed to deliver audits.
Assets and liabilities
Net Liabilities: The actual negative equity of $26,696,000 was primarily due to the actuarial valuation of our defined benefit
superannuation schemes, which resulted in an unfunded liability of $40,232,000 that is significantly greater than the valuation of
$34,337,000 for 201314. The Net Liabilities were higher than budget by $9,445,000. The major factors are:
Total Assets were favourable to budget by $138,000 mainly due to higher cash balance but is offset by lower investment in plant and
equipment and intangible assets.
Total Liabilities were higher than budget by $9,583,000 mainly due to the impact of the actuarial valuation for our defined benefit
superannuation schemes. The budgeted provision was based on the result of prior year because any change in the valuation could not
be ascertained at the time of budget submission.
85

Cash flows
The actual cash movement was $5,635,000 favourable to budget. This is mainly due to lower than budgeted amounts in employee
related expenses, reduced capital expenditure and significant reduction in our receivables.
20. Reconciliation of cash flows from operating activities to net result

Reconciliation of cash flows from operating activities to the net result as reported in the
statement of comprehensive income
2015
$'000
2014
$'000
Net cash from operating activities
2,828
479
(1,727)
(1,278)
(19)
(18)
(615)
(1,307)
(2,169)
(355)
(544)
249

Finance costs
Decrease/(increase) in provisions
(Decrease)/increase in prepayments and other assets
Decrease/(increase) in creditors
Net loss on disposal of plant and equipment and intangible assets
Net result
(22)
(2,246)
(2,252)
21. Financial instruments

The Audit Office's principal financial instruments and the main risks associated are outlined below. These financial instruments arise
directly from operations. The Audit Office does not enter into or trade financial instruments for speculative purposes.
Quantitative and qualitative disclosures together with our objectives, policies and processes for measuring and managing risk are
included throughout this financial report.
The Office Executive has overall responsibility for the establishment and oversight of risk management and reviews and agreed policies
for managing each of these risks. Risk management policies are established to identify and analyse risks, to set risk controls and to
monitor the risks faced by the Audit Office. Compliance with policies is reviewed by the Audit and Risk Committee on a continuous
basis.
(a) Financial instrument categories
Carrying Amount
2014
$'000
Note
Category
Carrying Amount
2015
$'000
Cash and cash equivalents
N/A
8,871
6,949
Receivables*
Receivables
4,439
6,266
Work in progress
Other financial assets
981
642
Financial liabilities measured at

amortised cost
1,819
1,772
Financial assets
Class:
Financial liabilities
Class:
Payables**
* Excludes statutory receivables and prepayments (not within scope of AASB 7).
** Excludes statutory payables and unearned revenue (not within scope of AASB 7).
86

(b) Credit risk
Credit risk is the risk of financial loss arising from another party to a contract or financial obligation. The Audit Offices maximum
exposure to credit risk is represented by the carrying amounts of the financial assets (net of any allowance for impairment).
Credit risk arises from the financial assets held, which are cash, receivables and work in progress. The Audit Office does not hold
collateral and has not granted any financial guarantees.
Cash
Cash comprises cash on hand and bank balances within the NSW Treasury Banking System. Interest rate as determined by NSW
Treasury is earned on daily bank balances and paid twice yearly.
Receivables trade debtors
All trade debtors are recognised as amounts receivable at balance date. Debtors are reviewed on an ongoing basis and their status
are reported to the Office Executive on a regular basis. Procedures as established in the Treasurer's Directions are followed to
recover outstanding amounts, including letters of demand. Debts which are known to be uncollectible are written off. An allowance
for impairment is raised when there is objective evidence that we are not able to collect all amounts due. No interest is earned on our
receivables. Invoices are made on 14 day terms.
The Audit Office is not materially exposed to concentrations of credit risk to a single debtor or group of debtors. Most of the debtors are
government agencies whose credit ratings are considered less risky. There are no debtors whose terms have been renegotiated.
The following table outlines our financial assets that are past due or impaired, which are the receivables category in the statement of
financial position.
Total
$'000
Past due but not

impaired*
$'000
Considered
impaired*
$'000
1,247
1,247
126
126
1,373
1,373
1,633
1,633
102
102
1,735
1,735
2015
< 3 months overdue
3 months 6 months overdue
> 6 months overdue
2014
< 3 months overdue
3 months 6 months overdue
> 6 months overdue
* The ageing analysis excludes statutory receivables, as these are not within the scope of AASB 7 and excludes receivables that are not past due and not impaired.
Therefore, the 'total' will not reconcile to the receivables total recognised in the statement of financial position.
Work in progress (WIP)

WIP is recognised as an amount receivable not billed at the balance date. WIP is reviewed and monitored by the Directors responsible
for the audit assignments and the Office Executive monthly. A provision for unrecoverable amounts is raised when there is objective
evidence that the WIP may not be recoverable.
87

(c) Liquidity risk
Liquidity risk is the risk that the Audit Office will be unable to meet its payment obligations when they fall due. The risk is continuously
managed through monitoring future cash flows to ensure adequate holding of liquid assets.
During the current and prior year, there were no defaults of loans payable. No assets have been pledged as collateral. An exposure to
liquidity risk is deemed insignificant based on prior period's data and current assessment of risk.
The liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced. Amounts
owing to suppliers (which are unsecured) are settled in accordance with the policy set out in NSW TC 11/12. For small business
suppliers, where terms are not specified, payment is made not later than 30 days from date of receipt of a correctly rendered invoice.
For other suppliers, if trade terms are not specified, payment is made no later than the end of the month following the month in which
an invoice or a statement is received. For small business suppliers, where payment is not made within the specified time period, simple
interest must be paid automatically unless an existing contract specifies otherwise. For payments to other suppliers, the Assistant
Auditor-General, Corporate Services may automatically pay the supplier simple interest. The rate of interest applied during the year was
10.15% (2014: 10.63%).
The table below summarises the maturity profile of the Audit Office's financial liabilities, together with the interest rate exposure.
Interest Rate Exposure
Nominal
Amount
Fixed Interest
Rate
$'000
Variable
Interest Rate
Maturity Dates
Non-Interest
Bearing
< 1 year
$'000
15 yrs
> 5 yrs
$'000
2015
Payables
1,819
1,819
1,819
1,819
1,819
1,819
2014
Payables
1,772
1,772
1,772
1,772
1,772
1,772
The amounts disclosed are the contractual undiscounted cash flows, therefore, the amounts disclosed above will not reconcile to the statement of financial position.
(d) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
The Audit Office has no exposure to foreign currency risk and does not enter into commodity contracts.
Interest rate risk sensitivity analysis
The sensitivity analysis is performed based on risk exposures in existence at the balance sheet date to show how profit or loss and
equity would have been affected by changes in the relevant risk variable that were reasonably possible at that date. This is determined
after taking into account the economic environment in which the Audit Office operates and the time frame for the assessment (i.e. until
the end of the next annual reporting period).
At reporting date, if interest rates had been 100 basis points higher and all other variables were held constant, the profit and equity
would have increased by $89,000 (2014: $69,000).
(e) Credit facility
The Audit Office has no current standing credit facility. The Audit Office's cash position has been consistently adequate to meet its
liquidity requirements.
(f) Fair value measurement
Financial instruments as shown in Note 21(a) are recognised in the statement of financial position at amortised cost, which
approximates the fair value because of the short-term nature of these financial instruments.
22. Events after the reporting period

There were no events subsequent to reporting date that require disclosure.
End of audited financial statements
88
Appendices
Appendix one
Senior executive and leadership positions
90
Appendix two
Financial audit clients, reviews
and other related services
93
Appendix three
99
Appendix four
Services to the profession
101
Appendix five
Publications 104
Appendix six
EEO, ethnic affairs priorities
and disability action plan
107
Appendix seven
Accounts payable performance
109
Appendix eight
Consultants
110
Appendix nine
Digital information security annual attestation
statement 111
Appendix ten
GIPA application information
112
Appendix eleven
Public interest disclosures information
Chris Clayton Director, Financial Audit Services

Client location State Transit Authority, Leichhardt Bus Depot
114

Appendix one
Performance statements for senior sxecutive positions

On 10 June 2015, Grant Hehir left to become Auditor-General of
Australia. As of 9 June 2015, Tony Whitfield is our Acting
Auditor-General. Salaries are reflected as at 30 June 2015.
Grant Hehir
Position
Auditor-General
Remuneration package
$487,395
The Auditor-General is responsible to parliament. There is no

performance agreement with, or annual review by, a minister.
Tony Whitfield
Position
(commencing 9 June 2015)
Position
Deputy Auditor-General
$388,845 plus retention

allowance of $43,000
Higher delegation allowance

(in addition to package above)
$4,547
Until 9 June 2015, Tonys main functions as Deputy Auditor-General

were to:
}}
lead the Audit Office of New South Wales as Chief Executive Officer
(CEO), taking charge of the day-to-day operations of the business

and providing strategic leadership and oversight
}}
assume the role and responsibilities of the Auditor-General in their
absence
}}
oversee and coordinate the Audit Offices financial and performance
audit operations, including policy, research and other professional
support activities.
Deliverables in 201415 as Deputy Auditor-General included:
}}
liaising closely with and assisting members of parliament, including
the Public Accounts Committee

}}
developing and progressing the Audit Offices strategic plan
}}
maintaining sound professional relations with audit clients, agency
CEOs and the Chairs of agency Audit and Risk Committees

}}
chairing the Office Executive Committee
}}
representing the Audit Office in briefing a number of overseas
parliamentary, audit and public sector delegations

}}
continuing to make a strong external contribution to the accounting
and auditing profession.

Tony successfully met the required performance criteria as Deputy
Auditor-General at an expert level.
From 9 June 2015, Tony was Acting Auditor-General and directly
responsible to parliament.
Public service senior executives remuneration band equivalent

range and average remuneration*
Band range $ Average remuneration
Band Four (equivalent)
Band Three (equivalent)
Band Two (equivalent)
Band One (equivalent)
$430,451$497,300
$436,392
$305,401$430,450
$309,199
$242,801$305,400
$273,778
$170,250$242,800
$201,128
Senior executives, by public service senior executives

remuneration band equivalent and gender
Female Male
Band Four (equivalent) 0
$430,451$497,300
Band Three (equivalent) 0

$305,401$430,450 1
Band Two (equivalent) 2
$242,801$305,400 3
Band One (equivalent) 12
$170,250$242,800 12
*Due to the nature of our business, 22 per cent of the Audit Offices employeerelated expenditure was related to senior executives.
90
Scott Stanton
John Viljoen
On 9 June 2015, Tony Whitfield became the Acting Auditor-General,

and Scott Stanton commenced as Acting Deputy Auditor-General.
Position
Assistant Auditor-General
$308,250

$949
Position
Acting Deputy Auditor-General

(commencing 9 June 2015)
Position
$297,769

$534
Until 9 June 2015, Scotts main functions as Assistant AuditorGeneral, Financial Audit, were to assist in overseeing and
coordinating the Audit Offices financial audit operations, in particular
the financial and resourcing aspects.
As an Assistant Auditor-General, Financial Audit, the main

function of John's position is to oversee and coordinate the Audit
Offices financial audit operations, in particular the financial audit
methodology, quality and reporting aspects and the information
systems auditing.
Deliverables in 201415 included:
}}
overseeing the completion of the implementation of the new
financial audit methodology and supporting technology

}}
further refining the format and content of the Auditor-Generals

}}
developing the budget for fees and production costs in Financial
Audit, monitoring results and business management improvements

}}
in conjunction with the Assistant Auditor-General, Corporate
Services, contributing to the enhancement of the practice

management system for the Audit Office
}}
overseeing the progression of innovation and change management
initiatives within the Audit Office

}}
continuing to make a strong contribution to the accounting and
auditing professions
}}
maintaining sound professional relations with audit clients
}}
actively participating in creating development opportunities for staff
within the Audit Office.

Scott successfully met the required performance criteria as Assistant
Auditor-General at a superior level.
As of 9 June 2015, Scott's main functions as Acting Deputy
Auditor-General are:
}}
lead the Audit Office as CEO, taking charge of the day-to-day
operations of the business and providing strategic leadership and

oversight
}}
assume the role and responsibilities of the Auditor-General in their
absence
}}
oversee and coordinate the Audit Offices financial and performance
audit operations, including policy, research and other professional

support activities.
Financial Audit Reports to Parliament

}}
overseeing the quality assurance program
}}
overseeing the Information Systems Audit teams strategic direction
}}
}}

John successfully met the required performance criteria at a superior
level.
Louise Mooney
Position
$304,756
As Assistant Auditor-General, Corporate Services, the main function

of Louises position is to oversee the Audit Office's Corporate
Services operations, in particular finance, human resources,
technology, communications, marketing and Audit Office strategic
planning.
}}
maintaining and promoting sound professional relationships with
government agencies, service providers and other key stakeholders

}}
sponsoring the enhancement of the practice management system
for the Audit Office

}}
overseeing the delivery of all corporate services functions to the
Audit Office
}}
providing leadership and guidance on the content and
administration of the Audit Office strategic planning process

}}
leading the design and implementation of a new employee
Number of executive and leadership positions filled by women*
201011
201112
relations and remuneration framework, capability and performance

management framework and human capital management system.
Louise successfully met the required performance criteria at a
superior level.
201213
11*
201314
11*
201415
14*
*These figures include Corporate Services Executive Managers.
91

Appendix one (continued)
Performance statements for senior executive positions

Kathrina Lo
Bola Oyetunji
Position
(commencing on 23 October 2014)
Position
Acting Assistant Auditor-General

(commencing on 25 May 2015)
$260,041
$245,831
As Assistant Auditor-General, Performance Audit, the main function of

Kathrina's position is to oversee the delivery of performance audits to
the Auditor-General.
}}
managing the financials and human resources of the Performance
Audit team
}}
delivering a program of performance audits agreed with the Auditor-
General, following consultation with a wide range of stakeholders

$621
As Acting Assistant Auditor-General, Financial Audit, the main function
of Bola's position is to assist in overseeing and coordinating the Audit
Office's financial audit operations.
Bola was Acting Assistant Auditor-General for only one month at 30
June 2015, and has not had a performance assessment at this level.
}}
liaising and engaging with the Public Accounts Committee
}}
sponsoring the Audit Offices new 100 Day Leaders Program.
Kathrina successfully met the required performance criteria at a
competent level.
Steven Martin
Position
$259,342
As an Assistant Auditor-General, Financial Audit, the main function of

Steven's position is to assist in overseeing and coordinating the Audit
Offices financial audit operations, in particular technical training of
audit staff.
}}
monitoring the eight special interest groups in the Audit Office
}}
ensuring that there is a structured technical training and
development program for staff

}}
}}
maintaining the Audit Offices outsourcing model
}}

Steven successfully met the required performance criteria at a
competent level.
92
Financial audit clients, reviews and other related services

Appendix two
Financial audit clients
Coal Innovation Fund NSW
Aboriginal and Torres Strait Islander Health

Practice Council of New South Wales
Cobar Water Board

Cobbora Holding Company Pty Limited
Aboriginal Housing Office
Cobbora Coal Mine Pty Limited
Art Gallery of New South Wales

Foundation, The
Cobbora Rail Company Pty Limited
Art Gallery of New South Wales Trust

Art Gallery of New South Wales Trust Staff
Agency
Australian Institute of Asian Culture and
Visual Arts Limited, The
Arts Education Foundation Trust
Ausgrid
Ausgrid Pty Limited
Australian Centre for Advanced Computing
and Communications Pty Limited
Australian Museum Trust
Australian Museum Trust Staff Agency
Barangaroo Delivery Authority
Barangaroo Delivery Authority Staff
Agency
Combat Sports Authority of NSW

Community Relations Commission For a
Multicultural NSW
Community Relations Commission Staff
Agency
Corporation Sole Minister Administering
the Environmental Planning and
Assessment Act 1979
Corporation Sole Minister Administering
the Heritage Act 1977
Cowra Japanese Garden Maintenance
Foundation Ltd
Cowra Japanese Garden Trust
Crown Employees (NSW Fire Brigades
Firefighting Staff Death and Disability)
Superannuation Fund
Energy Industries Superannuation Scheme

(EISS) Pool A and Pool B
Pty Limited
Energy Investment Fund
Environment Protection Authority
Environmental Protection Authority Staff
Agency
Environmental Trust
Eraring Energy
Essential Energy
Fair Trading Administration Corporation
Financial Counselling Trust Fund
Fire and Rescue New South Wales
Forestry Corporation of New South Wales
(trading as Forests NSW)
Gaagal Wanggaan (South Beach) National
Park Board of Management
Game Council of New South Wales
Game Council Division
Crown Entity, The
Gosford Water Supply Authority
Crown Solicitors Office
Government Property NSW
Dams Safety Committee
Green State Power Pty Limited
Biamanga National Park Board of

Management
Delta Electricity
Gulaga National Park Board of

Management
Board of Studies, Teaching and Educational

Standards
Department of Family and Community

Services
Office of Barangaroo Delivery Authority

Belgenny Farm Agricultural Heritage Centre
Trust
Board of Studies, Teaching and

Educational Standards Staff Agency
Board of Surveying and Spatial Information
Brett Whiteley Foundation, The
Building Insurers Guarantee Corporation
Department of Education and Communities
John Williams Memorial Charitable Trust

Department of Police and Justice
Department of Trade and Investment,
Milk Marketing (NSW) Pty Limited
Health Care Complaints Commission

Health Care Complaints Commission Staff
Agency
Health Professional Councils (13)
Historic Houses Trust of New South Wales
Foundation for the Historic Houses Trust
of NSW
Building Professionals Board
Department of Planning and Environment
Foundation for the Historic Houses Trust of

NSW Limited
Bush Fire Coordinating Committee
Department of Premier and Cabinet
Hamilton Rouse Hill Trust, The
Cancer Institute NSW
Department of Transport
Cancer Institute Special Purpose Service

Entity
Transport Cleaning Services
Rouse Hill Hamilton Collection Pty Limited

Home Care Service of New South Wales
Transport for NSW
Home Care Service Staff Agency
C.B. Alexander Foundation
Transport Services of NSW
Home Purchase Assistance Fund
Centennial Park and Moore Park Trust
TS Holding Company Pty

M
Limited
Home Warranty Insurance Fund
Central Coast Regional Development

Corporation
Charles Sturt University
Charles Sturt Services Limited
Charles Sturt University Foundation Trust
Charles Sturt Campus Services Limited
Chief Investigator of the Office of Transport
Safety Investigations
Chipping Norton Lake Authority
City West Housing Pty Limited
Destination NSW
Destination NSW Staff Agency
Election Funding Authority of New South
Wales
Electricity Assets Ministerial Holding
Corporation
Endeavour Energy
EIF Pty Limited
Hunter Development Corporation

Hunter Water Corporation
Hunter Water Australia Pty Limited
Illawarra Health and Medical Research
Institute Limited
Independent Commission Against
Corruption
Independent Liquor and Gaming Authority
Independent Liquor and Gaming Authority
Staff Agency
93

Appendix two (continued)
Independent Pricing and Regulatory
Tribunal
Independent Pricing and Regulatory
Tribunal Staff Agency
Independent Transport Safety Regulator
Independent Transport Safety Regulator
Staff Agency
Information and Privacy Commission NSW
Infrastructure NSW
Infrastructure NSW Staff Agency
Internal Audit Bureau of New South Wales
Jenolan Caves Reserve Trust
Judicial Commission of New South Wales
Macquarie University Property Investment

Company Pty Limited
Macquarie University Property Investment
Trust
MGSM Ltd
Risk Frontiers Flood (Australia) Pty Limited
U@MQ Limited
Macquarie Education South Africa NPC
Marine Parks Authority
Mental Health Commission of New South
Wales
Mental Health Commission Staff Agency
Mine Subsidence Board
Ministerial Corporation for Industry
Lands Administration Ministerial

Corporation
Ministerial Holding Corporation
Legal Aid Commission of New South Wales

Legal Aid Commission Staff Agency
Agency for Clinical Innovation Special

Purpose Service Entity
Albury Wodonga Health Employment
Division
Library Council of NSW Staff Agency

State Library of New South Wales
Foundation
Bureau of Health Information

Bureau of Health Information Special
Clinical Excellence Commission
Clinical Excellence Commission Special
Graythwaite Charitable Trust
Health Administration Corporation
Lifetime Care and Support Authority of

New South Wales
Public Health System Support Division

Special Purpose Service Entity
Local Government Superannuation

Scheme Pty Ltd
Health Education and Training Institute
Local Government Superannuation

Scheme Trustee
Local Land Services
-- Northern NSW Local Health District

Special Purpose Entity
Northern Sydney
-- Northern Sydney Local Health District
Southern NSW
Ministry of Health
Legislature, The
Library Council of New South Wales
Northern NSW
-- South Eastern Sydney Local Health

District Special Purpose Entity
Albury Base Hospital
Liability Management Ministerial

Corporation
Nepean Blue Mountains
South Eastern Sydney
Legal Profession Admission Board

Legislature (Audit of Members Additional
Entitlements), The
Murrumbidgee
-- Nepean Blue Mountains Local Health

Risk Frontiers Group Pty Limited
Landcom
-- Mid North Coast Local Health District

-- Murrumbidgee Local Health District
MUH Operations No. 2 Limited
Lake Illawarra Authority
Mid North Coast
Health Education and Training Institute

Special Purpose Service Entity
Justice Health and Forensic Mental Health
Network
-- Southern NSW Local Health Network

South Western Sydney
-- South Western Sydney Local Health
Network Special Purpose Entity
Sydney
-- ANZAC Health and Medical Research
Foundation Trust Fund
-- Sydney Local Health Network Special
Sydney Childrens Hospital Network
-- The Sydney Childrens Hospital
Network Special Purpose Servic Entity
Western NSW
-- Western NSW Local Health District
Western Sydney
-- Western Sydney Local Health District
NSW Kids and Families
Justice Health and Forensic Mental

Health Network Special Purpose
Service Entity
Ministry for Police and Emergency Services
Lord Howe Island Board
Local Health Networks
Motor Vehicle Repair Industry Authority
Lotteries Assets Ministerial Holding

Corporation
Central Coast
Local Land Services Staff Agency

Long Service Corporation
Luna Park Reserve Trust

Macquarie Generation
Macquarie University
Access Macquarie Limited
Australian Proteome Analysis Facility Ltd
CMBF Limited
COH Property Trust
Macquarie University Professorial
Superannuation Scheme
-- Central Coast Local Health District

Far West
-- Far West Local Health District Special
Purpose Entity
Hunter New England
-- Hunter New England Local Health
Illawarra Shoalhaven
-- Illawarra Shoalhaven Local Health
Motor Accidents Authority of New South

Wales
Mutawintji Board of Management
Mt Grenfell National Park Board of
Management
National Art School
Natural Resources Commission
Natural Resources Commission Staff
Agency
Networks NSW Pty Limited
New South Wales Aboriginal Land Council
New South Wales Crime Commission
94
New South Wales Crime Commission Staff

Agency
Office of the Director of Public

Prosecutions
Government Trust Fund
New South Wales Electoral Commission
Office of Environment and Heritage
Small Business Development Corporation

of New South Wales
New South Wales Electoral Commission

Staff Agency
Office of Hawkesbury-Nepean
Southern Cross University
New South Wales Film and Television

Office (trading as Screen NSW)
New South Wales Government
Telecommunications Authority
New South Wales Health Foundation
New South Wales Institute of Psychiatry
New South Wales Institute of Psychiatry
Staff Agency
New South Wales Institute of Sport
Institute of Sport Staff Agency
New South Wales Institute of Teachers
Office of the Institute of Teachers
New South Wales Rural Assistance
Authority
New South Wales Rural Fire Service
New South Wales Treasury Corporation
TCorp Nominees Pty Limited
Treasury Corporation Division of the
Government Service
Newcastle Port Corporation
NSW Architects Registration Board
NSW Board of Vocational Education and
Training
NSW Businesslink Pty Ltd
NSW Commission for Children and Young
People
NSW Fire Brigades Superannuation Pty
Limited
NSW Food Authority
NSW Government Telecommunications
Authority
NSW Land and Housing Corporation
NSW Ovine Johnes Disease TransactionBased Contribution Scheme
NSW Police Force
NSW Self Insurance Corporation
Office of Local Government

Office of Sport
Ombudsmans Office
Parliamentary Contributory Superannuation
Fund
Parliamentary Counsels Office
Asia Pacific Football Institute Operations

Pty Ltd
Norsearch Limited
SCU College Pty Ltd
State Rail Authority Residual Holding
Corporation
Parramatta Park Trust
State Records Authority of New South

Wales
Police Integrity Commission
State Rescue Board
Policy Integrity Commission Staff Agency

Port Authority of New South Wales
Port Botany Lessor Pty Limited
State Sporting Venues Authority

State Transit Authority of New South Wales
Western Sydney Buses Division
Port Kembla Lessor Pty Limited
State Water Corporation
Port Kembla Port Corporation
Stockton Bight Board of Management
Port of Newcastle Lessor Pty Ltd
Superannuation Administration Corporation

(trading as Pillar Administration)
Ports Assets Ministerial Holding

Corporation
Public Service Commission
Public Trustee NSW Common Fund
Rail Corporation New South Wales
Trainworks Limited
Rental Bond Board
Residual Business Management
Corporation
Responsible Gambling Fund
Rice Marketing Board for the State of New
South Wales
Roads and Maritime Services
WestConnex Delivery Authority
Sydney Catchment Authority

Sydney Cricket and Sports Ground Trust
Sydney Cricket and Sports Ground Trust
Staff Agency
Sydney Ferries
Sydney Harbour Foreshore Authority
Cooks Cove Development Corporation
Sydney Harbour Foreshore Authority
Casual Staff Division
Sydney Metro
Sydney Olympic Park Authority
Sydney Opera House Trust
Sydney Opera House Trust Staff Agency
Royal Botanic Gardens and Domain Trust
Sydney Ports Corporation
SAS Trustee Corporation
Sydney Trains
SAS Trustee Corporation Staff Agency

SAS Trustee Corporation Pooled Fund
Buroba Pty Limited
State Infrastructure Trust
Valley Commerce Pty Limited
Sydney Water Corporation

Teacher Housing Authority of New South
Wales
Technical and Further Education
Commission, New South Wales
Technical Education Trust Funds
NSW Skills Board
State Super Financial Services Australia

Limited
NSW State Emergency Services
State Super Retirement Fund
The Office of the Childrens Guardian of

NSW
NSW Trains
State Super Fixed Term Pension Plan
TransGrid
NSW Trustee and Guardian

NSW Trustee and Guardian Common Fund
Financial Management
Office of Finance and Services
Office of the Childrens Guardian
State Super Investment Fund

STC Pisco 1 Unit Trust
STC Pisco 2 Unit Trust
Southern Way Unit Trust
Service NSW
Sesquicentenary of Responsible
Treasury
Trustees of the ANZAC Memorial Building
Trustees of the Farrer Memorial Research
Scholarship Fund
Trustees of the Museum of Applied Arts
and Sciences
95

Trustees of the Museum of Applied Arts
and Sciences Staff Agency
University of Sydney, The

Bandwidth Foundry International Pty Ltd
City of Griffith and the Shires of Leeton,

Carrathool and Murrumbidgee
Trustees of the Parliamentary Contributory

Superannuation Fund
SydneyLearning Pty Limited
Worimi Board of Management
Sydney Talent Pty Limited
WorkCover Authority of New South Wales
Universities Admission Centre (NSW &

ACT) Pty Limited
The Warren Centre for Advanced

Engineering Limited
University of Newcastle, The
United States Studies Centre Limited
Newcastle Innovation Limited

UON Services Limited
UON Singapore Pte Ltd
University of New England
Agricultural Business Research Institute
Limited
Sport UNE Limited
UNE Foundation
UNE Foundation Limited
UNE Health Pty Ltd
UNE Life Pty Ltd
UNE Open Pty Ltd
UNE Partnerships Pty Limited
University of New South Wales
UNSW Global Pty Limited
Australian Education Consultancy
Limited
UNSW Global India Pvt Limited
UNSW (Hong Kong) Limited
UNSW Global (Singapore) Pte Limited
NewSouth Innovations Pty Limited
Cystemix Pty Limited
University of Sydney Professorial

Superannuation System
Wyong Water Supply Authority
Westmead IVF Pty Limited
Zoological Parks Board of New South

Wales
University of Western Sydney, The

Television Sydney (TVS) Limited
Limited
Trust
UWS College Pty Limited
UWS Early Learning Limited
uwsconnect Limited
Whitlam Institute within the University of
Western Sydney Limited and Whitlam
Institute within the University of Western
Sydney Trust
University of Wollongong
UOWD Limited
UOWC Limited
niCentre Conferences and
U
Functions Pty Limited
he University of Wollongong USA
T
Foundation
The New South Wales Minerals Industry/

University of New South Wales
Sydney Business School Pty Limited
Education Trust
University of Wollongong Recreation and

Aquatic Centre Limited
UK Friends of UNSW Australia
Wollongong UniCentre Limited
University of New South Wales Foundation

University of New South Wales Press
Limited
UNSW Hong Kong Foundation Limited
UNSW Study Abroad Friends and US
Alumni Inc
University of Technology, Sydney
accessUTS Pty Limited
AustLii Foundation Ltd
Insearch Limited
Insearch Education
Insearch Education International Pty
Limited
Urban Growth NSW Development

Corporation
ustralian Technology Park
A
Sydney Limited
Urban Growth NSW Development
Corporation Staff Agency
Venues NSW
ewcastle International Sports
N
Centre Club
Veterinary Practitioners Board
Waste Assets Management Corporation
Water Administration Ministerial
Corporation
Wentworth Park Sporting Complex Trust
Insearch (Shanghai) Limited
Western Sydney Parklands Trust
Sydney Educational Broadcasting Limited
Wild Dog Destruction Board
UTS Global Pty Limited
Workers Compensation Nominal Insurer

(trading as The NSW WorkCover Scheme)
Wayahead Pty Limited
Qucor Pty Limited
University of New South Wales Foundation

Limited
Workers Compensation (Dust Diseases)

Board
Wine Grapes Marketing Board for the
96
Audit-related services requested by the Treasurer under s. 27B(3)(c)

of the Public Finance and Audit Act 1983
Any audit or audit related services for which:
}}
a Commonwealth or State Government Body requires, for regulatory purposes, a NSW public sector agency to have information, reports or
returns audited, reviewed, examined or certified by an auditor, and

}}
a NSW public sector agency asks the Audit Office to undertake the audit, review, examination or certification.
Audit of concise financial reports of NSW public sector agencies

Audit or audit related services to enable NSW public sector agencies to meet requirements under the Corporations Act 2001
or the Superannuation Industry (Supervision) Act 1993
Audit reports required by s. 24 of the Charitable Fundraising Act 1991 for NSW Government agencies that conduct fundraising appeals
Audit of financial reports for funds within the Special Deposits Account
Audit or audit related services requested by a NSW Government agency in relation to information, reports of returns required to be provided by
NSW Government agencies under the terms of a contract, lease or agreements between the NSW Government agency and third parties
Audit of data returns or reports required under the Australian Government/State Agreements
Audit of data returns or reports to acquit Disaster Relief Payments from the Commonwealth
Audit of data returns or reports to acquit grants provided by the Commonwealth and other donors to NSW Government agencies
Review of agencies compliance with the requirements of NSW Government Treasury Directions Section 744.05 Disaster Recovery Plan and
the NSW Government Digital Information Security Policy
Audit of universities Higher Education Research Data Collection (HERDC) Return Return 1 as required by Commonwealth funding
arrangements and/or agreements
Audit of general purpose financial statements of the NSW Trustee and Guardian Common Fund Trustee and the NSW Trustee and Guardian
Common Fund Financial Management
Audit of special purpose and trust funds for controlled entities of the Ministry of Health
Audit of Macquarie Generations half-year financial statements ending 31 December 2014
Certify financial management, control systems and other matters for the Audit Offices clients required by AusAID as a condition of AusAID
funding
Issue letters of comfort to interested parties of NSW Treasury Corporation regarding its domestic and offshore funding activities
Review of the reasonableness of the estimates and forecasts in the Half Year Review for 201415
Review of the reasonableness of the estimates and forecasts in the 201516 Budget
97

Overseas visits
Staff member
Date of travel
Return date
Destination
Reason
Grant Hehir
18 August 2014
24 August 2014
Samoa
To attend the Pacific Association of Supreme Audit

Institutions (PASAI) congress
Robert Hayek
21 November 2014
29 November
2014
Dubai
To undertake an audit of University of Wollongong,

Dubai
Celia Withers
21 November 2014
29 November
2014
Dubai
To undertake an audit of University of Wollongong,

Dubai
Lyndal Hayward
22 November 2014
26 November
2014
New Zealand
To participate in the Australia and New Zealand

School of Government (ANZSOG) Masters Program
Bola Oyetunji
24 February 2015
28 February 2015
China
To undertake an audit of the University of New South

Wales (Nanjing)
Bola Oyetunji
28 February 2015
4 March 2015
Hong
Kong and
Singapore

Wales (Hong Kong) and the University of New South
Wales (Singapore)
Nirupama Mani
28 February 2015
4 March 2015
Hong
Kong and
Singapore

Wales (Hong Kong) and the University of New South
Wales (Singapore)
98

Appendix three
Appearances before parliamentary committees
We appeared before the following parliamentary committees.
Date
Committee
Event
Who
15 September 2014
Public Accounts
Committee
Examination of the Auditor-Generals Performance

Audits
Grant Hehir
Rob Mathie
Sean Crumlin
Memberships
Audit Office staff were members of the following public sector organisations and committees.
Alison Gatt
Australian Council of Auditors-General Financial Reporting and Auditing Committee
Barry Underwood
Corruption Prevention Network Board Member (ex officio)
Grant Hehir
James Sugumar
NSW Public Sector Community of Finance Professionals Advisory Board
John Viljoen
Australasian Council of Auditors-General Quality Assurance Review Panel
Kathrina Lo
Heads of Performance Audit Group

Project Advisory Group for review of Standard on Assurance Engagements ASAE 3500 Performance
Engagements by Auditing and Auditing and Assurance Standards Board
Peter Barnes
Taxation Hardship Relief Board
Tony Whitfield
Australasian Council of Auditors-General Financial Reporting and Auditing Committee
99

Appendix three (continued)
Presentations
Audit Office staff gave the following presentations to various public sector audiences.
Title
Presenter(s)
Date
Who
Public sector audit functions in Australia,

particularly financial audit
Steven Martin
1 August 2014
Chinese National Audit Office Delegation
Executive development program the

changing public sector context within New
South Wales and Australia
Grant Hehir
13 August 2014
2014 NSW Public Service Commission

Executive Development Program public
sector
Observations of implementation fraud control

program in Local Government
Barry Underwood
28 August 2014
BPKP Indonesian Delegation
Australian Government Leadership Network

Conference: Towards excellence building
capacity for change
Grant Hehir
18 September 2014
The role of the Audit Office and future of

public-private partnerships
Grant Hehir
20 October 2014
Infrastructure Partnerships Australia
NSW Treasury policy launch Certifying the

Steven Martin
effectiveness of internal controls over financial
information
13 November 2014
NSW Public Sector Chief Financial

Officers
Oversight of the Audit Office functions, role

of the Auditor-General and the Audit Offices
interaction with parliament
Grant Hehir
18 November 2014
Myanmar National Parliament
Issues impacting Australian universities
Steven Martin
1819 November 2014 Universities Australia Finance Officers

Group
Barry Underwood
James Sugumar
Role of the Auditor-General and challenges of Grant Hehir
good governance
21 November 2014
South East Sydney Local Health District
Infrastructure performance audits
4 to 7 May 2015
UK National Audit Office Delegate
Ethics and leadership in the public sector

Grant Hehir
ensuring integrity role of watchdog agencies
8 May 2015
Reporting in the NSW public sector
28 May 2015
The Audit Board of the Republic of

Indonesia Delegation
10 June 2015
NSW Ministry of Health Financial

Accountants Forum
Kathrina Lo
Rod Longford
Giuilia Vitetta
Ed Shestovsky
Steven Martin
Rod Longford
David Daniels
Financial reporting in NSW Ministry of Health
Chris Clayton
Robert Hayek
Enterprise risk management maturity model
Bola Oyetunji
19 June 2015
Chairs of NSW Agencies Audit and Risk

Committees
Key messages from 2014 audits
Tony Whitfield
19 June 2015
Chairs of NSW Agencies' Audit and Risk

Committees
100

Appendix four
Memberships
Audit Office staff were members of the following committees, professional associations, panels or working parties.
Alison Gatt
Module Advisory Committee for the Audit and Assurance module
Alison Gatt
Chartered Accountants Australia and New Zealand Research Group
Alison Gatt
Macquarie University Department of Accounting Departmental Advisory Board
Alison Gatt
Australian Prudential Regulatory Authority Superannuation National Audit Consultative Committee
Chris Giumelli
CPA Australia Public Sector Committee
Grant Hehir
Australian Institute of Company Directors
Vijyata Kirpalani
Chartered Accountants Australia and New Zealand Young Professional Panel Chair
Lambros Lambropoulos
Information Systems Audit and Control Association (ISACA) Director, Sydney Chapter
Steven Martin
Chartered Accountants Australia and New Zealand Accounting, Assurance and Governance
Discussion Group
Scott Stanton
CPA Australia NSW Divisional Council

CPA Australia NSW Divisional Council representative to the Public Sector Committee
Tony Whitfield
International Governance and Performance Research Centre Advisory Panel
Education
Audit Office staff contributed to these professional publications, resources and qualification programs.
Lambros Lambropoulos
Contributing author Strategic Planning: A Guide to Strategic Planning for Board and Management
Teams
Weini Liao
CPA Australia Subject Matter Expert in the Financial Accounting and Reporting standard setting
workshop
Xin Yin Oii
Institute of Actuaries of Australia Chartered Enterprise Risk Actuary
101

Appendix four (continued)
Submissions to professional bodies
The Audit Office coordinates the efforts of all Australian audit offices developing responses to professional bodies on pronouncements
they have exposed for comment. We determine which will impact audit offices, our clients or the public sector in general. We have
prepared or contributed to the following responses by the Australasian Council of Auditors-General.
Title
Date
AASB Australian Accounting Standards Board

Tentative Agenda Decision Recognition of Residual Value for Infrastructure Assets
22 April 2015
AUASB Auditing and Assurance Standards Board

Exposure Draft 01/14 Proposed Standard on Assurance Engagements ASAE 34XX Assurance
Engagements on Controls (Replacement of AUS 810)
Exposure Draft 01/15 Reporting on Audited Financial Reports New and Revised Auditor Reporting
Standards and Related Conforming Amendments
22 August 2014
26 June 2015
IAASB International Auditing and Assurance Standards Board

Exposure Draft Proposed Changes to the International Standards on Auditing (ISAs) Addressing
Disclosures in the Audit of Financial Statements
10 September 2014
IPSASB International Public Sector Accounting Standards Board

Consultation Paper The Applicability of IPSASs to Government Business Enterprises and Other Public
Sector Entities
19 December 2014
102
Presentations
Audit Office staff gave the following presentations to various professional auditing and accounting, and other audiences.
Title
Presenter(s)
Date
Who
Risk transformation panel
Grant Hehir
23 July 2014
Public and private sector at KPMG
Changing our stripes can the public

sector push the boundaries of private sector
performance?
Grant Hehir
29 July 2014
Institute of Internal Auditors
Role of the Auditor-General and Audit Office

and how changes may impact accountants in
government
Grant Hehir
16 September
2014
Sydney accountants in government

discussion group CPA Australia
Excel-lent errors client spreadsheets and the

risks they present
Brett Chaiyawat
1213 March
2015
Chartered Accountants Australia and

New Zealand
Contestability the public sector business

model of the future
Grant Hehir
16 March 2015
Institute of Internal Auditors SOPAC

Conference
Public sector ARIS getting ready for reporting

season early close/year end audits
John Viljoen
17 March 2015
Delegates from NSW Government

Agencies

risks they present
Brett Chaiyawat
24 March 2015
Chartered Accountants Australia

and New Zealand Audit Conference,
Melbourne

risks they present
Brett Chaiyawat
17 April 2015
Chartered Accountants Australia

and New Zealand Audit Conference,
Brisbane
Governance in the public sector
Barry Underwood
13 May 2015
Corruption Prevention Network
Government financial reporting update
Grant Hehir
18 May 2015
Ernst & Young
Protecting infrastructure
Kathrina Lo
2021 May 2015
National Security Australia Conference,

Melbourne
Corporate governance forum 2015 a new era

in governance
Grant Hehir
5 June 2015
Governance Institute of Australia
Fraud improvement kit managing your fraud

control obligations
Barry Underwood
10 June 2015
Corruption Prevention Network
Career lessons from the masters Sydney

accountants in government
Tony Whitfield
16 June 2015
Sydney Accountants in Government

(SAG) Discussion Group CPA
Australia
The role and functions of a best practice CFO

and where a CFO needs to focus to maximise
impact and value
Barry Underwood
26 June 2015
The Public Sector Committee Annual

Breakfast 2015 CPA Australia
103
Publications
Appendix five
Financial audit reports
Volume
Focus
Date released
Volume Three 2014
Members Additional Entitlements
1 July 2014
Volume Four 2014
NSW State Finances
28 October 2014
Volume Five 2014
Electricity and Water
11 November 2014
Volume Six 2014
Premier and Cabinet
13 November 2014
Volume Seven 2014
Transport
18 November 2014
Volume Eight 2014
Police and Justice
20 November 2014
Volume Nine 2014
Family and Community Services
25 November 2014
Volume Ten 2014
Treasury and Finance
27 November 2014
Volume Eleven 2014
Planning and Environment
4 December 2014
Volume Twelve 2014
Health
9 December 2014
Volume Thirteen 2014
Education and Communities
11 December 2014
Volume Fourteen 2014
Trade and Investment
15 December 2014
Volume One 2015
Areas of Focus from 2014
20 February 2015
Volume Two 2015
Universities
28 May 2015
Volume Three 2015
Members Additional Entitlements
25 June 2015
104
Performance audit reports

Agencies audited
Performance audit report
Date released
}}
Environment
10 July 2014
The Learning Management and Business Reform

Program
17 December 2014
WestConnex: Assurance to the Government
18 December 2014
21 January 2014
29 January 2014
Managing Length of Stay and Unplanned Readmissions

in NSW Public Hospitals
23 April 2015
Country Towns Water Supply and Sewerage Program
4 May 2015
Large Construction Projects: Independent Assurance
7 May 2015
22 June 2015
Implementing Performance Audit Recommendations
24 June 2015
Efficiency and Effectiveness in Tax Collection
25 June 2015
}}
Department
}}
Regional
of Trade and Investment
Infrastructure and Services
}}
Department
}}
Roads
Protection Authority
}}
WestConnex
Delivery Authority
}}
Infrastructure
NSW
}}
Transport
}}
NSW
for NSW
Treasury
}}
Department
}}
Transport
}}
Roads
for NSW
}}
Sydney
Water Corporation
}}
Department
}}
NSW
Health
}}
Department
}}
Regional
of Trade and Investment
Infrastructure and Services NSW Office
of Water
}}
NSW
Treasury
}}
Infrastructure
}}
Transport
}}
NSW
NSW
for NSW
Health
}}
Roads
}}
Sydney
Trains
}}
Venues
NSW
}}
Department
of Primary Industries
}}
Department
}}
Destination
}}
Sydney
NSW
Opera House
}}
Department
of Trade and Investment, Regional

Infrastructure and Services
}}
Department
}}
NSW
Treasury
}}
NSW
Ministry of Health
}}
Department
}}
Transport
for NSW
}}
NSW
Police Force
}}
Office
of Finance and Services
}}
Office
of State Revenue
105
Publications
Appendix five (continued)
Professional Update
Professional Update is produced by our Audit Support team with the main purpose of informing our readers of current issues
in the accounting and auditing industry.
Professional Update was published in the following months:
July 2014
August 2014
September 2014
October 2014
November 2014
February 2015
March 2015
April 2015
May 2015
June 2015
Annual report
Annual Report 201314
Total external production costs for the Annual Report 201415: $0.
106
EEO, ethnic affairs priorities and disability action plan

Appendix six
Trends in the representation of EEO groups
Benchmark/Target*
2013
2014
2015
EEO Group
% of total staff
Women
50
52.7
51.2
50.2
Aboriginal people and

Torres Strait Islanders
2.6
People whose first language

was not English
19
44.9
45.7
40.4
People with a disability
n/a
3.1
2.2
2.7
People with a disability requiring

work-related adjustment
1.5
1.4
0.9
Benchmark/Target*
2013
2014
2015
Trends in the distribution of EEO groups
EEO Group
% of total staff
Women
100
94
96
100
Aboriginal people and

Torres Strait Islanders
100
People whose first language

was not English
100
89
94
98
People with a disability
100
n/a
n/a
n/a
People with a disability requiring

work-related adjustment
100
n/a
n/a
n/a
* Provided
by the Public Service Commission.
1 A
Distribution Index of 100 indicates that the centre of the distribution of the EEO group across salary levels is equivalent to that of other staff.
Values less than 100 mean that the EEO group tends to be more concentrated at lower salary levels than is the case for other staff. The more
pronounced this tendency is, the lower the index will be. In some cases the index may be more than 100, indicating that the EEO group is less
concentrated at lower salary levels.
The Distribution Index is not calculated where EEO group or non-EEO group numbers are less than 20.
107
EEO, ethnic affairs priorities and disability action plan

Appendix six (continued)
EEO outcomes
In 201415, the Audit Office prioritised the
following policies and programs:
}}
reviewed
and updated all work health

and safety policies and reinforced
these to all staff, including individual
responsibilities
}}
educated
and trained all staff to

handle bullying and harassment, and
encourage anti-discriminatory behaviour
}}
key
policies and practices implemented

by leveraging off workforce data
}}
work-life
balance and flexible working

practices championed across the
organisation
}}
a
performance management
framework, including a performance
management system, developed for
use in the 201516 financial year
}}
quarterly
reporting which is escalated

to the Office Executive on all safety
initiatives, such as metrics on safety key
performance indicators.
Multicultural Policies and

Services Program
Disability Action Plan
The Audit Offices activities are centred

on providing services to parliament and
government agencies, not directly to
members of the public. Therefore we have
limited capacity to address multicultural
services issues.
We respect the rights of Australian
citizens and residents who wish to
become citizens to seek employment from
advertised vacancies in the Audit Office.
Our employment record is evidence of
the support for cultural diversity. Our
commitment is reflected in the number of
racial, ethnic and ethno religious groups
that comprise our staff.
Our Disability Action plan continues to

meet the needs of people with a disability,
both staff and clients, by:
}}
ensuring
their access to the Audit Office

premises and the premises they need to
visit in the course of their duties
}}
ensuring
their access to information

about the services of the Audit Office
}}
improving
their employment
opportunities at the Audit Office
}}
ensuring
they have all the tools and

equipment they need to conduct their
work.
Our Multicultural Policies and Services

Program Statement is our planning
document showing we will address the
needs of a culturally diverse society.
In 201516, we will focus on the following

policies and programs:
}}
building
on work done of measuring the

effectiveness of our work health and
safety policies and practices to mitigate
serious injury or risk
}}
building
on our bullying and harassment

and anti-discrimination awareness by
continuing training
}}
continuing
to utilise workforce data to

inform development of key policies and
practices
}}
continuing
to champion work-life
balance and promote the use of flexible
work practices
}}
implementing
the performance
management system due to launch in
July 2015
}}
reviewing
our remuneration process and

building strong links to performance
agreements
}}
taking
a more responsive approach to

learning and development needs of the
business
}}
clarifying
and strengthening our

employee value proposition.
108
Accounts payable performance

Appendix seven
Aged analysis at the end of each quarter
Quarter
Current
(i.e. within due date)
$'000
Less than 30
days overdue
$'000
Between 30 and 60
days overdue
$'000
Between 60 and 90
days overdue
$'000
More than 90
days overdue
$'000
361,470
471, 497
298, 230
298, 230
14,884
51, 299
88, 143
1,170
105, 536
5,367
21,864
13, 744
5, 280
145
All suppliers
September
December
March
June
Small business suppliers
September
December
March
June
Accounts due or paid within each quarter
Measure
All suppliers
Number of accounts due for payment
Number of accounts paid on time
Actual percentage of accounts paid on time (based on number of accounts)
Dollar amount of accounts due for payment
Dollar amount of accounts paid on time
Actual percentage of accounts paid on time (based on $)
Number of payments for interest on overdue accounts
Interest paid on overdue accounts
Small business suppliers
Number of accounts due for payment to small businesses
Number of accounts due to small businesses paid on time
Actual percentage of small business accounts paid on time (based on number of accounts)
Dollar amount of accounts due for payment to small businesses
Dollar amount of accounts due to small businesses paid on time
Actual percentage of small business accounts paid on time (based on $)
Number of payments to small business for interest on overdue accounts
Interest paid to small businesses on overdue accounts
September
$'000
December
$'000
March
$'000
June
$'000
850
789
93%
5,442,534
5,051,952
93%
653
589
90%
13,263,183
11,963,269
90%
755
504
67%
10,007,440
9,918,163
99%
1,075
785
73%
11,147,673
10,724,623
96%
29
24
83%
121,828
100,823
83%
39
36
92%
70,716
65,276
92%
1
92
38
20
53%
62,056
44,531
72%
72
47
65%
55,144
42,092
76%
Commentary
During the year we paid the majority of our accounts on time, and we achieved our target of 90 per cent for the year. When comparing to the
previous year, the actual payment of accounts on time at 94 per cent is an increase on last years 88 per cent. Staff turnover in the third quarter
of the financial year caused a delay in processing payments during the recruitment and training period. A new practice management system was
implemented at the beginning of the 201415 financial year, which has assisted timely processing of invoices and approvals. Processes in this
system are continually being improved.
Interest on late payments
We had one instance of penalty interest for a delayed payment to a supplier. The late payment amounted to $92 (over seven day terms). The
delay was attributed to the invoice being held up for coding to correct audit-related matter expense accounts.
Credit Card Certification
The Corporate Credit Policy was last reviewed and updated in January 2014 and considered current. All corporate credit cards were replaced
by purchasing cards in January 2014 at the Audit Office in accordance with NSW Treasurys requirement. The policy and controls applied to the
use of credit cards are applicable and applied to the use of the purchasing cards. The rules are consistent with government policy as outlined in
Treasurers Directions and NSW Treasury Circulars. For the 201415 financial year credit/purchasing card use by officers of the Audit Office has
been in line with government requirements.
109
Consultants
8
Appendix eight
Consultants
A consultant in the Audit Office is referred to as a person or organisation that provides expert advice professionally to assist decisionmaking. The Audit Office consultancy expenses for 201415 were $361,000, provided by 13 organisations. The consultancy services
were provided for audit specialist services, quality assurance and benchmarking for a Human Resources review.
Contracts of $50,000 or more
Consultant
Nature of service
Oakton Services Pty ltd
Project quality assurance
Mercer Australia Pty Ltd
Market practice research and benefits benchmarking
91,179
Infosec Services Pty Ltd
Audit services critical infrastructure, performance audit
65,700
Total contracts of $50,000 or more
(3 contracts)
Contracts of $50,000 or less (total)
(10 contracts)
Total expenditure for 201415
Amount $
162,470
319,349
41,651
361,000
110
Digital information security annual attestation statement

9
Appendix nine
Digital Information Security Annual Attestation Statement for the 201415 Financial Year for the Audit
Office of New South Wales
I, Tony Whitfield, am of the opinion that the Audit Office of New South Wales had an Information Security Management System in place
during the 201415 financial year that is consistent with the Core Requirements set out in the NSW Government Digital Information
Security Policy.
The controls in place to mitigate identified risks to the digital information and digital information systems of the Audit Office of New South
Wales are adequate.
There is no agency under the control of the Audit Office of New South Wales which is required to develop an independent ISMS in
accordance with the NSW Government Digital Information Security Policy.
The Audit Office of New South Wales has maintained certified compliance with ISO 27001 Information technology Security
techniques Information security management systems Requirements by an Accredited Third Party during the 201415 financial year.
A T Whitfield PSM
Sydney, 4 September 2015
111
GIPA application information

10
Appendix ten
Commentary on applications for information under the Government Information (Public Access) Act 2009 (the GIPA Act) can be found on page 54.
Table A: Number of applications by type of applicant and outcome*
Access
granted in
full
Access
granted in
part
Access
refused in
full
Information
not held
Information
already
available
Refuse to
deal with
application
Refuse to
confirm/
deny
whether
information
is held
Application
withdrawn
Media
Members of parliament
Private sector business
Not for profit organisations

or community groups
Members of the public

(application by legal
representative)
Members of the public

(other)
* More than one decision can be made in respect of a particular access application. If so, a recording must be made in relation to each such decision.
This also applies to table B.
Table B: Number of applications by type of application and outcome
Access
granted in
full
Access
granted in
part
Access
refused in
full
Information
not held
Information
already
available
Refuse to
deal with
application
Refuse to
confirm/
deny
whether
information
is held
Personal information
applications*
Access applications
(other than personal
information applications)
Access applications that are

partly personal information
applications and partly other
Application
withdrawn
* A 'personal information application' is an access application for personal information (as defined in clause 4 of Schedule 4 to the Act) about the applicant
(the applicant being an individual).
Table C: Invalid applications

Reason for invalidity
Number of applications
Application does not comply with formal requirements (section 41 of the Act)
Application is for excluded information of the agency (section 43 of the Act)
Application contravenes restraint order (section 110 of the Act)
Total number of invalid applications received
Invalid applications that subsequently became valid applications
112
Table D: Conclusive presumption of overriding public interest against disclosure:

matters listed in Schedule 1 of the Act
Number of times consideration used*
Overriding secrecy laws
Cabinet information
Executive Council information
Contempt
Legal professional privilege
Excluded information
Documents affecting law enforcement and public safety
Transport safety
Adoption
Care and protection of children
Ministerial code of conduct
Aboriginal and environmental heritage
* More than one public interest consideration may apply in relation to a particular access application and, if so, each such consideration is to be recorded (but only
once per application). This also applies in relation to Table E.
Table E: Other public interest considerations against disclosure: matters listed in table to section 14 of the Act
Number of occasions when application not successful
Responsible and effective government
Law enforcement and security
Individual rights, judicial processes and natural justice
Business interests of agencies and other persons
Environment, culture, economy and general matters
Secrecy provisions
Exempt documents under interstate Freedom of Information legislation
Table F: Timeliness
Number of applications
Decided within the statutory timeframe (20 days plus any extensions)
Decided after 35 days (by agreement with applicant)
Not decided within time (deemed refusal)
0
Total 3
Table G: Number of applications reviewed under Part 5 of the Act (by type of review and outcome)
Decision varied
Decision upheld
Total
Internal review
Review by Information Commissioner*
Internal review following recommendation under section 93 of Act
Review by Administrative Decisions Tribunal
Total 0
Total 0
Total 0
* The Information Commissioner does not have the authority to vary decisions, but can make recommendation to the original decision-maker. The data in this case
indicates that a recommendation to vary or uphold the original decision has been made by the Information Commissioner.
Table H: Applications for review under Part 5 of the Act (by type of applicant)
Number of applications for review
Applications by access applicants
Applications by persons to whom information the subject of access application relates

(see section 54 of the Act)
Table I: Applications transferred to other agencies under Division 2 of Part 4 of the Act (by type of transfer)
Number of applications transferred
Agency-initiated transfers
Applicant-initiated transfers
113
Public interest disclosures information

11
Appendix eleven
Commentary on public interest disclosures and the Public Interest Disclosures Act 1994 can be found on page 57.
Statistical information on Public Interest Disclosures (PIDs) for the period 1 July 2014 to 30 June 2015
Categories of wrongdoing
Maladministration
Corrupt conduct
Function
Government
information
contravention
Serious and
substantial waste
Local government
pecuniary interest
contravention
TOTAL
Stat. Other Function
Stat.
Other
Number of public
officials who made
PIDs direct to the
Audit Office
Number of PIDs
made directly to your
investigating authority
Number of PIDs
received by your
under section 25 of
the PID Act
Number of PIDs
received by your
under section 26 of
the PID Act
Total number of
PIDs
Local government
pecuniary interest
contravention
TOTAL
Number of PIDs
handled with another
Total number of PIDs
Corrupt conduct
Maladministration
Serious and
substantial waste
Number of PIDs
referred to a public
authority under
section25 of the PID
Act
Number of PIDs
referred to another
under section25 of
the PID Act
Number of PIDs
handled solely by your
Number of PIDs
handled with a public
authority
Government
information
contravention
Number of PIDs
handled by
commencing a formal
investigation
Number of PIDs
finalised
114
Index
a
allegations of waste see public interest
governance 4758
committees
5153
disclosure
54
ethics
52
management
49
reporting, financial
53
risk management
55
stakeholder rights
57
structure
5051
disclosures
annual report
contact details
2
external costs
106
33, 37, 41, 48, 50, 5153, 56, 57, 85, 86, 90,
100
Chairs
2021, 23
Auditor-General
history
2
message
6
Australasian Council
44, 45, 99, 102
of Auditors-General
b
benchmarking
budget
business risks
c
5, 6, 1315, 21, 107

5, 14, 16, 6062
5158
18, 22, 42, 46, 58

case studies
code of conduct
48, 50, 52, 54
committees see Audit and Risk Committee,
Public Accounts Committee, Work Health Safety
Committee and Renumeration Committee
consultants
corporate governance
credit card certification
creditor payments
d
73, 110
5, 4758
109
61
digital information security 111

disability action plan
107108
e
4, 36
employee satisfaction
energy management 41
environmental action 41
equal employment opportunity
107108
equity
37, 39
finance
67, 68, 72, 85, 88
people
3739
executive positions
89, 9092
external audit
48, 51, 53
f
financial audits
client list
9396
modified opinions
4, 14, 2426
recommendations, acceptance of

4, 10, 1618, 21, 22, 23, 27, 33, 54, 57
reports
104
satisfaction with
4, 1213, 21
timeliness
15, 23
financial commentary
6061
accounts payable performance
109
break-even target
60
financial statistics
62
financial statements
6669
freedom of information see Government
Information (Public Access) Act 2009
Government Information (Public Access) Act 2009

application information
h
highlights
i
industrial relations
internal audit
Internal Audit and Risk
Management Statement
l
54, 112113
112113
45
38, 49
51, 5356, 58
56
3, 18, 49, 53, 6465, 70, 93

legislation
letter of transmission
2
m
management
executive remuneration and performance
statements
9092
Office Executive
89, 36, 41, 49, 5051, 5253, 58, 9092
oversight
49
memberships
99, 101
mission 3
multicultural policies
39, 108
and services program
o
occupational health and safety see work health
and safety
office hours
overseas
visits
p
2
98
1213
parliamentarian satisfaction
parliamentary committees,
44, 99
appearances before
people see also staff 35
performance audits
1718, 2734
follow-up
7, 18
program
6, 17, 23, 27, 34, 45
recommendations, acceptance of
4, 6, 16
reports
2833, 105
restructure
6, 1617, 23, 42
satisfaction
4, 1213, 2021
performance
37, 39, 49
management
agreements
6, 10, 3637, 42, 49, 61
statements, executive
9092
presentations
5, 44
private sector
103
public sector
100
privacy
5758
professional development
38, 40
projects
10
MiCareer
6, 10, 37, 40, 49, 60
10, 36-37, 40, 54
Project Blue

4, 1213, 1618, 27, 50, 53, 57, 90, 92
hearings
99
publications
104106
q
quality assurance
r
53, 56
recreation club
39
reporting, financial

6, 15, 2324, 44, 51, 53, 57
Remuneration Committee 37, 48, 50, 51, 54
reviews
external
7, 14, 16, 18, 26, 32, 53
internal 37, 42, 45, 45, 4857, 109110
risk management

17, 48, 51, 53, 5556, 58, 86
s
social club see recreation club
staff
counselling
39
productivity
4, 6, 37, 61
recruitment
3738, 42
turnover
4, 6, 3839, 60, 109
17, 27, 31, 34, 57
State Plan NSW 2021
10, 42, 49
strategic plan
structure
governance
50
organisation
8
t
13, 37, 4046, 48, 52, 55, 108
training
4, 6, 3839, 60, 109
turnover, staff
v
values
vision
w
3, 38
3, 6, 10, 37, 49, 50, 57
Waste Reduction
and Purchasing Plan
work health and safety
committee
y
year ahead, the
41
41, 108
41
10
115
Glossary
Audit evidence
Audit evidence is examined to determine
the accuracy of account balances in the
financial statements. Main sources of audit
evidence are: inspection (records or tangible
assets); observation; external confirmation;
re-calculation; re-performance; analytical
procedures; and enquiry.
Audit methodology
A particular set of processes or procedures
that when applied in combination will
provide adequate assurance about the
risk of material misstatement in financial
statements, and will document the audit
in compliance with Australian Auditing
Standards.
Provides the Auditor-General with
independent assurance on the Audit Office's
financial reporting, risk management and
organisational processes.
Gateway review
A series of structured reviews that are
held at key decision points (gates) in the
procurement process.
Internal control framework
An integrated set of policies and procedures
designed to assist management achieve
its goals and objectives.
Management letter
Letter sent to client outlining financial
information found in audit.
Material misstatements
Misstatements, including omissions, are
considered to be material if they, individually
or in the aggregate, could reasonably
be expected to influence the economic
decisions of users taken on the basis of the
financial report.
Modified auditors opinion
A controlled entity exists when another entity

has the power to govern its financial and
operating policies over and obtain benefits
from its activities.
Modifications of an audit opinion can be

adverse, qualified or disclaimed. Adverse
opinions are issued when misstatements
in the financial statements are material and
pervasive. Qualified opinions are issued
when there are material misstatements in the
financial statements or we cannot get all the
evidence we require. An opinion is disclaimed
only where auditors cannot get the evidence
they need and the effects could be material
and pervasive.
CPA
Risk Management Policy
Accounting body CPA Australia.
A policy setting out the how the risks which

have been identified by the risk assessment
procedure will be managed and controlled.

Association established by Auditors-General
for their mutual support and the sharing of
information.
Controlled entity
CA
Accounting body Chartered Accountants
Australia and New Zealand.
116

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annual report

Audit Office of New South Wales | Annual Report 201415

annual report 201415

The history of the Auditor-General

1824 William Lithgow appointed Colonial Auditor-General,

Level 15, 1 Margaret Street

1855 The UK Constitution Act 1855 formalised government

t +61 2 9275 7100

in New South Wales, and the Auditor-General was

f +61 2 9275 7200

1870 Powers and duties of the Auditor-General first set

office hours 8.30 am5.00 pm

1902 Audit Act 1902 prohibited the Auditor-General from

Under section 12A of the Annual Reports (Statutory

being a member of the Executive Council or of the

1929 Audit (Amendment) Act 1929 changed the tenure

1984 Public Finance and Audit Act 1983 established the

1989 Auditor-Generals Office declared a statutory body,

2001 Auditor-Generals role expanded to reporting on issues

of waste, probity and financial judgement.

2004 Auditor-General given power to employ staff directly,

2013 Tenure of Auditor-General extended to eight years.

Cover: Liz Ames Senior Auditor

Making a difference through audit excellence.

The Audit Office of New South Wales

Our main clients

of New South Wales

people of New South Wales.

The Auditor-General helps parliament hold

Performance audits build on our financial

Audit and Review

The Auditor-General also provides certain

Family and Community Services

96% of financial audit and

24% staff turnover, up from

100 per cent agreed we provide valuable

Performance index for CFO satisfaction

100 per cent agreed we perform audits with

Performance auditees overall performance

97 per cent believed our financial audit

436 financial audits completed.

72 per cent of staff describe the Audit Office

11 performance audits completed.

67 per cent staff satisfaction, a drop from 73

4.5-star greenhouse building rating

10 performance audits followed up by

Financial audit clients (CFO only)

$0.5 million loss (excluding

Hosted the Australasian Council of AuditorsGeneral (ACAG) Performance Audit Managers

Current ratio (solvency) is healthy.

Our costs compare

5 submissions made on proposed changes

94 per cent of our creditors were paid

We benchmark ourselves against the national

Total audit costs (excluding payroll tax)

Audit Office of New South Wales

Total audit costs (excluding payroll tax)

goals remain unchanged and cover our

Producing better outcomes

Ultimately, we are here to produce better

We have achieved a lot this year by

We are also continuing on our journey

Our strategic goals have delivered

The contracting-out framework